The Effectiveness of Voluntary Corporate Tax Disclosures: An Australian Case Study

The disclosure of tax information by corporate taxpayers is often thought to
be an important tool in the quest by tax administrators to reduce multinational
tax avoidance. To date, most initiatives have involved disclosure to revenue
authorities. A second limb to disclosure is the provision of tax information to
shareholders and the general public. There are very few examples of voluntary
public disclosure by corporate taxpayers and many observers are sceptical as
to its effectiveness in reducing tax minimisation. Australia provides a prominent
example of a public disclosure regime with its Tax Transparency Code reports
that have been produced by taxpayers on a voluntary basis since 2016. This
article reports on a study that tested the extent to which disclosures under a
voluntary code can increase awareness or understanding of the tax behaviour of
large corporations and whether the information affects public perceptions and
consequent corporate responses. Three different measurements were used to
test the potential impact of disclosure: the comprehensibility of the information
provided, whether the market viewed information provided as new information,
and the volume and accessibility of information.