The Fair Tax Mark (FTM) criteria note says companies are awarded points for meeting each criterion – up to a possible 20 points – and in the first year companies can achieve a FTM by scoring ‘above the threshold of 13’. Criteria 1 to 5 are concerned with transparency. Numbers 6 to 11 relate to ‘tax rate, tax avoidance and disclosure’. Number 7 compares the company’s average tax rate over four years with ‘the expected headline rate’. Between one and four points are awarded here, depending on the difference between the current tax rate and the headline rate. No points are awarded if the current tax rate is more than seven percentage points below the headline rate. However, two bonus points (subject to the overriding four-point maximum) can be awarded at number 7 ‘if the company explains its tax position well by scoring above four [that is, five] points in questions 8, 9 and 10’.
In a long exchange on Richard Murphy’s blog, Andrew Jackson suggested that the present criteria would allow a ‘clearly tax-avoiding company’ to get a FTM. Murphy replied: ‘You’re right: the condition [behind criterion 7] may not be sufficient. We’ve never denied the criteria will change.’
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Fair Tax Mark: criteria to be revised
Andrew Goodall comments on the Fair Tax Mark
The Fair Tax Mark (FTM) criteria note says companies are awarded points for meeting each criterion – up to a possible 20 points – and in the first year companies can achieve a FTM by scoring ‘above the threshold of 13’. Criteria 1 to 5 are concerned with transparency. Numbers 6 to 11 relate to ‘tax rate, tax avoidance and disclosure’. Number 7 compares the company’s average tax rate over four years with ‘the expected headline rate’. Between one and four points are awarded here, depending on the difference between the current tax rate and the headline rate. No points are awarded if the current tax rate is more than seven percentage points below the headline rate. However, two bonus points (subject to the overriding four-point maximum) can be awarded at number 7 ‘if the company explains its tax position well by scoring above four [that is, five] points in questions 8, 9 and 10’.
In a long exchange on Richard Murphy’s blog, Andrew Jackson suggested that the present criteria would allow a ‘clearly tax-avoiding company’ to get a FTM. Murphy replied: ‘You’re right: the condition [behind criterion 7] may not be sufficient. We’ve never denied the criteria will change.’
