Tax - a corporate responsibility priority

Added 24 Oct 2014
Eurodad member IBIS recently published a report entitled “Tax – a corporate responsibility priority”. The report analyses both theory and practice in the context of tax’s status as a growing priority on the corporate social responsibility (CSR) agenda. 

Politicians, citizens and the media are increasingly linking tax and corporate responsibility, bringing the role of corporate tax in society into the spotlight. International taxation rules have been shown to be flawed and the EU, the OECD and the G20 are trying to address the shortcomings.

However, at the moment we don’t have a global tax regime. Corporations can exploit different tax rules in different countries to their own advantage. A grey area between legal and illegal tax exploitation, and where companies can manoeuvre according to the own interpretation of the “spirit of the law”, persists.

However, the greater attention tax and responsibility is getting has brought stronger scrutiny of the choices companies make. Corporates and investors are being asked to be more and more transparent about their tax planning strategies and policies. More communication and clarity about the relationship between tax policies and corporate responsibility is needed.

Looking at well-established and broadly applied CSR guidelines and frameworks, IBIS found that:
  • Corporate tax is considered a part of corporate responsibility.
  • There is only very limited guidance on how to incorporate tax corporate responsibility standards or operationalise responsible tax practices.
  • There is more detailed material on tax and corporate responsibility for both investors and corporations outside of these formalised guidelines and frameworks.
  • There is potential to establish jointly owned guidance on operationalising responsible tax policies and practices from this material and from the experiences of corporates and investors.
In addition, a survey of the most successful corporates and investors in Denmark found that:
  • The majority of respondents believe tax is a corporate responsibility and even more have a corporate tax policy.
  • There are no consistent references to CSR guidelines and frameworks in the tax policies, which suggests the established systems provide little operational support.
  • Only six of the 19 Danish companies and investors have made their policies public and issue regular reports on their implementation.
This puts Danish companies and investors at risk of being associated with irresponsible tax behaviour by the media and public.

Click here to read the full report or on the download button below.