Business urged to take a more responsible approach to tax

Corporate tax campaigners are taking a new tack. Rather than highlighting what companies should stop doing, they are drawing attention to what companies could be doing.

A new report from ActionAid, Christian Aid and Oxfam draws attention to how firms can act more responsibly in areas including transfer pricing, use of tax incentives and lobbying.

Within each of these areas, the charities’ report Getting To Good gives detailed examples of what more responsible tax decisions would look like, in order to bring about positive impacts for developing countries and the realisation of human rights.

For example, companies could publish country-by-country reports before being legally required to do so, or audit their use of tax incentives and reliefs on a regular basis, to ensure they are delivering investment, employment or other benefits.

In addition, the report suggests the need for a change of culture within multinationals, towards an acceptance that they can go above and beyond being legally compliant on tax, in recognition of the huge impact that their tax decisions have on the rest of society.

The charities also highlight that responsible tax is good for businesses, helping them to mitigate reputational and other risks.
Barry Johnston, director of policy, advocacy & campaigns at ActionAid, commented: “Businesses must recognise that paying a fair amount of tax is both the smart thing and the right thing to do. At its heart, the question of corporate tax avoidance is one of fairness and justice.

“Corporate tax avoidance is now scarcely out of the news, and many companies have faced huge reputational damage for playing fast and loose with the rules.”