Keeping up with Tax Banking & Capital Markets - 2024 Summer edition
We hope that you are ready for the upcoming (and awaited) summer season! We welcome the break with the summer edition of our Keeping up with Tax for Banking and Capital Markets focused on Economic, Social and Governance (ESG) which is so relevant for our industry.
Specifically, the articles cover the following areas:
- Where are global ESG standards heading in the short term as well as increasing disclosure trends?
- How does the Pillar 2 law drive up global minimum tax rates, and what does this mean for your approach to ESG?
- Why is it important to have an ESG Tax strategy and how do you go about it?
- Customer Tax Integrity - Latest trends
Contact us or your regular PwC contacts if there is anything you want to discuss further.
Kind regards,
Murielle Filipucci and Nenad Ilic
Where are global ESG standards heading in the short term as well as increasing disclosure trends?
Through an ESG lens, tax, and transparency around tax, is increasingly being incorporated into the governance title, with businesses expected to address stakeholder concerns on the topic and publicly disclose how their tax strategy helps address issues around sustainability and economic inequalities.
How does the Pillar 2 law drive up global minimum tax rates, and what does this mean for your approach to ESG?
On 13 June 2024 an amendment bill was published, which makes changes to the Luxembourg Pillar 2 law with effect as from 31 December 2023 (retroactively). The amendment bill mainly aims to integrate the clarifications and additional technical provisions resulting from the OECD administrative guidance approved in 2023, including amongst other things.
Why is it important to have an ESG Tax strategy and how do you go about embedding it?
While rarely the most visible area of an ESG strategy, it’s clear that how an organisation manages its tax affairs will have an important role in achieving its wider ESG strategy, even if non-tax stakeholders are often not completely clear as to how. A good place to start unlocking that uncertainty is to break ESG down into its constituent parts for tax.
Customer Tax Integrity - Latest trends
In our 2023 summer edition of Keeping up with Tax Banking & Capital Markets, we spoke about ‘Customer Tax Integrity – Insight on the key principles and best practice markets’.
We highlighted the fact that Financial Institutions (FIs) face an increasing number of regimes, rules, and expectations from various stakeholders to identity risks of tax evasion and aggressive tax avoidance among their customers.
This issue is particularly relevant to banks due to their regulatory, tax and social responsibilities as intermediaries and gatekeepers in the financial system. One could say that banks have become the ancillaries of the tax authorities as they constitute golden data providers in the context of the automatic exchange of information. The various updates of the Directive on Administrative Cooperation (DAC) over the past decade as well as the increasing number of controls and audit by the tax authorities and regulators have the same purpose: More tax transparency to fight tax evasion and aggressive tax planning.
