Cape Town - Gold Fields and Sasol have clinched the top awards in PwC’s Building Public Trust Awards: Excellence in the field of tax reporting in 2015.
Gold Fields [JSE:GFI] was the overall winner in the category for tax reporting for multinational companies, while Sasol [JSE:SOL] was announced the overall winner in the category tax reporting for domestic companies for the second consecutive year.
Kumba Iron Ore [JSE:KIO] was also highly commended for excellence in tax reporting, with Vodacom Group [JSE:VOD] and Anglogold Ashanti [JSE:ANG] commended for the significant improvement in the quality of their tax reporting in their 2014 reports over 2013.
According to Paul de Chalain, head of tax services at PwC Africa, tax is increasingly becoming a reputational issue as companies are being asked to explain their tax affairs and in the process expected to be more transparent, and maintain trust with both their stakeholders and the wider public.
He said building public trust remains a priority for companies aiming to increase their resilience in an ever changing world.
The Building Public Trust Awards were introduced in South Africa in 2014 to encourage and promote greater tax transparency in reporting.
Although South Africa is not a member of the OECD, it recently agreed to implement the OECD’s Base Erosion & Profit Shifting (BEPS) country-by-country reporting model, which sets out the information multinational companies will need to file with the relevant tax authorities. BEPS aims to address perceived gaps in international tax rules.
"How a large business manages tax risk can affect its financial performance and reputation," said Professor Mervyn King, chairperson of the King Committee on Corporate Governance and member of the judging panel, in a statement on Thursday.
"CEOs and boards of large businesses are increasingly considering tax risk management and a definitive tax policy as part of their overall corporate governance," said King.
He said several years ago boards did not concern themselves from a strategic point of view with tax policy. They merely looked at the amount of tax payable in compliance with legislation and regulation.
“Today, the need for strong internal corporate governance and risk management has become more vital for organisations, their boards and their shareholders.
“The requirements of the King Code of Corporate Governance are designed to facilitate risk management, including tax risks, which create impacts on reputation. Tax risk management should appear on the board’s agenda.”
The performance of each company was assessed against a tax transparency framework developed by PwC. The framework consists of mandatory tax disclosure requirements (IFRS and the King Code), voluntary tax disclosure requirements based on mandatory requirements applicable in other countries and voluntary disclosure suggestions and best practice.
The data used to evaluate the extent of tax reporting against the framework was sourced from annual reports, corporate social responsibility reports, annual financial statements and integrated reports for the top 100 JSE listed companies for the 2014 financial period, as well as other relevant reports from companies’ websites related to the company’s tax approach.
Each of the company’s reports was evaluated independently by two members of the Department of Taxation at the University of Pretoria, using a five-point Likert scale for most criteria in order to include an element of qualitative assessment.
A shortlist of companies for each of the categories was drawn from the results of this evaluation. The tax reporting of each company on the short list was then reviewed and analysed by an independent panel of judges.