Interplay between Tax and Sustainability

Overview

Given the increasing importance of ESG reporting across the globe, the interplay of tax and sustainability has gained significant importance. From carbon levies to green subsidies to tax transparency, the landscape is wide and evolving. This requires businesses to understand emerging tax transparency policies, make adequate disclosures to stakeholders, and navigate the imposition of carbon taxes on supply chains. In the coming years, new carbon levies, complex computation mechanisms, and enhanced tax transparency disclosure requirements across jurisdictions are expected to increase. 

With Indian government’s increasing impetus on ESG reporting, corporations in India need to focus on disclosure of their tax practices and strategies, including tax payments, incentives, and structures. In the near future, the Government is also expected to introduce additional tax disclosure policies aimed at promoting transparency and accountability, reducing tax avoidance and evasion, and aggressive tax planning. It is also important for businesses to understand the impact of the carbon levies on their supply chain. Businesses would need to re-evaluate their global supply chains not only to mitigate exposure to such levies but also to reduce their overall carbon footprint.