This article analyses the impact of ESG on MNE tax management
with a special focus on transfer pricing and business
restructuring.
Tax Management and ESG
As stated by the UN, environmental social and corporate
governance (ESG) is not only an issue that concerns individuals but
also a strategic priority of multinational enterprises (MNEs),
investors and governments as well. Following the UN initiative,
European Commission has also introduced several directives
regarding ESG. In this regard, ESG impacts MNES' tax
management in various ways.
For example, many governments provide tax incentives to
encourage environmentally sustainable practices. For instance,
companies utilising renewable energy sources may be eligible for
tax advantages. These incentives encourage companies to adopt
eco-friendly practices and alleviate their tax burdens.
