Aliging Profit with Purpose - Global Goals Yearbook 2019

FINANCING COMMON PROSPERITY
On June 21, 2016, the European Council agreed on a draft
directive addressing tax avoidance practices commonly used
by large companies. The directive is part of a January 2016
package of Commission proposals to strengthen rules against
corporate tax avoidance. The package builds on 2015 OECD
recommendations to address tax-base erosion and profit-shifting.
The Commission proposals require large multinational companies
to disclose publicly the income tax they pay within the
European Union, country by country. In addition, they would
be asked to disclose how much tax they pay on the business
they conduct outside the EU.
Organisation for Economic Co-operation and Development
(OECD), during the Opening Session of the OECD Forum on
Responsible Business Conduct in June 2018.
“Stakeholders need and expect consistent, quality information
about tax and payments to government in order to have an
informed public debate around questions of equity, fairness,
and acceptability of tax approaches,” says Judy Kuszewski,
Chair of the Global Sustainability Standards Board at the
Global Reporting Initiative (GRI). “Tax revenues and their
application are essential to society’s ability to deliver on the
Sustainable Development Goals. Likewise, tax transparency
promotes trust and credibility in the taxation system and in
the tax practices of companies. It enables stakeholders to make
informed judgments about whether a company’s position on
tax and payments to governments reflects society’s priorities
and creates a reliable basis for decision-making.”
Stop letting the fox keep the geese
Companies should be prepared to face increasing pressure
and regulations regarding transparency on corporate tax
payments. Many individuals and organizations around the
world are already working to promote the accurate disclosure
of corporate tax payments.
Corporate Europe Observatory released a study detailing how
the “Big Four” accounting firms – Deloitte, EY, KPMG, and
PWC – influence EU tax policies, despite their obvious conflicts
of interest as designers and providers of tax-avoidance
schemes to multinational corporations. Despite all revelations
of their assistance in tax avoidance since the Luxembourg Leaks,
the Big Four increased their public procurement contracts
for advising the EU Commission from €7 million in 2014 to
€10.5 million in 2018.
Sven Giegold, financial and economic policy spokesperson
of the Greens/EFA group and the European Parliament, commented:
“Paying and courting the fox to keep the geese has
to stop! We need EU institutions with integrity to win tax
justice. The EU Commission has to stop giving EU funding
to the tax-avoidance experts for advice on tax justice and
employ sufficient independent expertise.”
Reforming corporate taxation
As national economies become increasingly integrated, there
have been growing calls from around the world – including
investors, governments, and broader civil society – for more
corporate reporting on tax. Colin Meyer, Professor of Management
Studies at the University of Oxford, says: “Corporate
taxation is in need of urgent reform, and several alternatives
have been considered. One involves shifting both corporate
and personal taxes from a focus on production to consumption;
another is to move personal taxation to an accrual basis.
There are limitations to both. A third approach is to consider
how corporations can be encouraged to promote a more socially
responsive agenda that includes a willingness to pay a
‘fair share’ of taxes as part of their corporate purposes.” >>
Global Goals Yearbook 2019
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