Good tax planning set to become a CSR target

Tax avoidance is ‘as big an issue as sweatshops’, and could become the main target for CSR activity, a global charity has said. The international poverty NGO ActionAid has stated a ‘business case’ for good tax practices and recommendations for companies to achieve them. It says following the letter of the law is no longer sufficient to protect business from the risks associated with tax planning, that inadequate tax planning transparency increases risk, and that the structures and practices of tax planning are at the heart of tax responsibility, rather than the amount paid as a result. At present, taxation is not viewed as a core CSR issue, and has been seen by companies as someone else’s responsibility — a feature, says ActionAid, of a nascent CSR issue. It suggests remedial measures for businesses, including: creating a company tax policy stating the principles applied and the practices banned; ensuring board-level supervision of tax policymaking; disclosing a range of information on tax practices and their impacts. ActionAid suggests businesses work together and with stakeholders to formulate a mutually agreed code of conduct on tax. In the UK, large multinationals such as Barclays and Vodafone have been subjected to direct political action over allegations of tax evasion. More recently, some of the world’s largest grain traders, including ADM, Bunge, Cargill and Dreyfus, have been accused of huge non-payment of corporate tax in Argentina. The country’s revenues and customs department is seeking almost $500m (£307m, €346m) from them. Martin Hearson, ActionAid’s tax policy adviser, said: “So far businesses have reacted to criticism of their tax avoidance by denying any responsibility. “This is exactly how the fashion industry reacted when claims of ‘sweatshop’ abuses emerged in the 1990s. Just as fashion companies who failed to take these allegations seriously incurred major reputation damage, so businesses accused of tax avoidance need to respond with more than reflex denials.” More…

News selected by Covalence | Country: Global | Company: ADM, Bunge, Cargill, Dreyfus | Source: Ethical Performance