Report urges business to go beyond compliance on paying tax

There are many steps multinationals can take towards more responsible tax practices, three charities say in a new report.

Rather than highlighting what companies should stop doing, ActionAid, Christian Aid and Oxfam draw attention to how firms can act more responsibly in areas including transfer pricing, use of tax incentives and lobbying.

The charities' new 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, it suggests companies could publish country-by-country reports before being legally required to do so as well as 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.

Penny Fowler, head of private sector at Oxfam, commented: “Companies and investors need to recognise that paying their fair share of tax is a human rights issue for which corporations must take responsibility, alongside such issues as labour and land rights.

"Until businesses adopt a more responsible approach to paying tax that goes beyond a focus on compliance and instead ensures they contribute fairly to the societies that their operations rely on, millions of vulnerable people in developing countries will continue to be deprived of the jobs, hospitals and schools which that tax revenue could help fund.”