Felipe Yáñez, Tax partner at Mazars Chile.
Much is said about policies and sustainable development of companies and countries, linking it to all aspects of their operations, including tax aspects. But what does sustainability refer to in terms of taxes?
It is important to define what we mean by “sustainability”, since it can be understood in two ways: both by the way in which a company contributes to the achievement of the sustainable development objectives set by the government of the country where it operates, and by the implementation by the company itself of a particular model of sustainable development, which generates an inclusive relationship between the company and the different interest groups (stakeholders) that revolve around its activity.
In the first case, the Sustainable Development Goals reflect international parameters such as the 17 Sustainable Development Goals (SDGs) defined by the UN.
Given its increasing relevance, I will refer to the individual role of the company. This concept was born as a consequence of the fundamental change in the understanding of the role of the company, which is no longer conceived as an organization that exclusively seeks to maximize its results for the benefit of its owners, but as an entity with broader objectives, which include among others the benefit of the stakeholders with whom it relates in its activity: shareholders, financiers, workers, clients, suppliers, local communities, and even the government itself in the case of long-term or strategically important projects.
In any case, the content of the tax policy will be determined by adherence to the principles of tax compliance that inspire BEPS (e.g. the rejection of the artificial transfer of profits and the erosion of tax bases in the jurisdictions where the company acts, etc.) and for cooperative tax compliance initiatives between government and taxpayers.
Then, and from a regulatory point of view, when we talk about sustainability we think fundamentally about new transparency obligations that force companies and their advisers to report on the main elements and characteristics of their tax policies, so that in this way the different Stakeholders can assess whether said tax policy is aligned with their own values and interests. This scenario is already a reality in the European Union, where obligations to disclose tax strategies and policies such as the so-called GRI 207 apply. And, in our region, it is worth mentioning the case of Mexico, where there is an obligation to disclose to the administration schemes that can generate a tax benefit, by tax advisers and taxpayers.
Finally, does this affect the companies that operate in our country? For now we will see a partial impact, in the case of local companies that are part of large conglomerates.
We will also see an impact in the case of local companies that – in their capacity as suppliers – must inform their clients abroad about their sustainability policies. The same can apply to local companies seeking financing from abroad.
In any case, it must be understood that sustainability – in its many variants – will now be one of the key aspects when evaluating the performance of a company.