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More and more voluntary initiatives keep popping up: from the B-Team to the Global Reporting Initiative (GRI), to CSR Europe and PwC, in the past six months or so different groups of businesses have announced new initiatives around responsible corporate tax practices. Not to mention earlier initiatives such as Accountancy Europe’s tax transparency template, published in July 2016. One thing that all these initiatives have in common is that they all put tax transparency at their core.
There is a need for better tax transparency by companies. After all the tax scandals that came to light in the last years, it’s not only citizens, journalists and NGOs who are asking for more transparency, but also investors. In fact, in a recent consultation about the GRI’s draft voluntary reporting standards on tax, almost half of the respondents were institutional investors, like pension funds and asset managers.
This shouldn’t really come as a shock. At the launch of the CSR Europe/PwC Blueprint on responsible tax behaviour in Brussels hosted by Accountancy Europe, a wise business leader stated that if businesses don’t explain their tax, others will explain it for them. And the framing of this story will, more likely than not, be negative. It’s important for businesses to be proactive – they must be transparent about their tax planning strategies and tell the story and context behind their tax payments.
These voluntary initiatives show that the business world is moving and responding to society’s call for more transparency. Citizens’ trust in large companies and the overall tax system is faltering, in a context of increasing inequality. Some businesses are clearly taking the lead to rectify this situation by being transparent about their tax arrangements.