There is growing evidence that responsible tax practices make clear business sense as well as moral sense, ActionAid said as it published a guide for investors and businesses seeking a “more socially responsible approach” to corporate tax.
There is growing evidence that responsible tax practices make clear business sense as well as moral sense, ActionAid said as it published a guide for investors and businesses seeking a “more socially responsible approach” to corporate tax.
Tax responsibility: an investor guide said investors’ long-term prosperity depended on companies and investors working together to develop responsible tax management and reporting.
“Tax is increasingly under the spotlight, intensifying financial, regulatory and reputational risks in this area for companies. Where tax practices are aggressive, they can also undermine the ability of governments in developing countries to provide public services,” the anti-poverty charity said.
Mike Lewis, ActionAid’s tax justice policy adviser, said: “Investors are demanding more information about the tax practices and positions of the companies they invest in. Everyone would benefit from clear benchmarks which allow companies to communicate their practices clearly, and investors to gauge risks.”
The guide sets out seven indicators of a responsible approach to tax, and provides questions that investors might wish to ask to help determine a company’s “risk and performance” against those criteria:
“Tax policy: 1 Who sets the policy, and who provides input? 2 Who has responsibility and how is the policy reviewed? 3 How does the content of the policy address risk? Tax management: 4 What systems are in place to implement the policy? Reporting: 5 Is the tax policy available? 6 How much tax is paid, and where? 7 Is detailed information given on subsidiaries in tax havens?”
ActionAid surveyed the FTSE 100 companies (as at November 2011) against those criteria. Seventy-eight operated in developing countries. It found that “although many of the UK’s largest companies remain opaque, there are some emerging good practices”.
“Some multinationals, like Legal & General, now specifically rule out the use of tax structures deemed risky by revenue authorities. Some, like Centrica, go further than their legal requirements to report on their tax structures and positions around the world,” it said.
ActionAid emphasised that it was not attempting to define acceptable and unacceptable tax planning, over which “there is currently no consensus between governments, investors, campaigners and some companies”.
Its aim was to equip investors with “tools to engage companies on acceptable levels of risk associated with tax policy and planning”.
Almost every FTSE 100 company has subsidiaries in tax havens, ActionAid said. Fifteen companies responded to the charity’s questions about tax haven subsidiaries.
The charity defines tax havens as “jurisdictions whose tax rules and systems of regulation, generally designed to attract companies and individuals from overseas, undermine other jurisdictions’ tax bases”. They are generally characterised by “a combination of light regulation; the preservation of corporate and banking secrecy; low or no-tax rates for foreign individuals and companies; and special tax rules for foreign residents”.
There is growing evidence that responsible tax practices make clear business sense as well as moral sense, ActionAid said as it published a guide for investors and businesses seeking a “more socially responsible approach” to corporate tax.
There is growing evidence that responsible tax practices make clear business sense as well as moral sense, ActionAid said as it published a guide for investors and businesses seeking a “more socially responsible approach” to corporate tax.
Tax responsibility: an investor guide said investors’ long-term prosperity depended on companies and investors working together to develop responsible tax management and reporting.
“Tax is increasingly under the spotlight, intensifying financial, regulatory and reputational risks in this area for companies. Where tax practices are aggressive, they can also undermine the ability of governments in developing countries to provide public services,” the anti-poverty charity said.
Mike Lewis, ActionAid’s tax justice policy adviser, said: “Investors are demanding more information about the tax practices and positions of the companies they invest in. Everyone would benefit from clear benchmarks which allow companies to communicate their practices clearly, and investors to gauge risks.”
The guide sets out seven indicators of a responsible approach to tax, and provides questions that investors might wish to ask to help determine a company’s “risk and performance” against those criteria:
“Tax policy: 1 Who sets the policy, and who provides input? 2 Who has responsibility and how is the policy reviewed? 3 How does the content of the policy address risk? Tax management: 4 What systems are in place to implement the policy? Reporting: 5 Is the tax policy available? 6 How much tax is paid, and where? 7 Is detailed information given on subsidiaries in tax havens?”
ActionAid surveyed the FTSE 100 companies (as at November 2011) against those criteria. Seventy-eight operated in developing countries. It found that “although many of the UK’s largest companies remain opaque, there are some emerging good practices”.
“Some multinationals, like Legal & General, now specifically rule out the use of tax structures deemed risky by revenue authorities. Some, like Centrica, go further than their legal requirements to report on their tax structures and positions around the world,” it said.
ActionAid emphasised that it was not attempting to define acceptable and unacceptable tax planning, over which “there is currently no consensus between governments, investors, campaigners and some companies”.
Its aim was to equip investors with “tools to engage companies on acceptable levels of risk associated with tax policy and planning”.
Almost every FTSE 100 company has subsidiaries in tax havens, ActionAid said. Fifteen companies responded to the charity’s questions about tax haven subsidiaries.
The charity defines tax havens as “jurisdictions whose tax rules and systems of regulation, generally designed to attract companies and individuals from overseas, undermine other jurisdictions’ tax bases”. They are generally characterised by “a combination of light regulation; the preservation of corporate and banking secrecy; low or no-tax rates for foreign individuals and companies; and special tax rules for foreign residents”.
