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Rising global tax scrutiny shows the case for change: High interest at London event in GRI’s ‘game changer’ Tax Standard

Gerasimos — Thu, 16 Jan 2020 15:31:43 +0000

The increasing number of inquiries into the tax practices of corporations demonstrates why a transition towards transparent tax disclosure is urgently required.

This was a key message from Elise J Bean, former United States Senate tax investigator, as she addressed an event in London today to highlight GRI’s launch of the world’s first country-by-country public reporting standard for tax. Governments around the world, including several EU countries and Australia, are currently reviewing the tax practices of multinationals.

The GRI Tax Standard responds to concerns over the impact corporate tax avoidance has on the ability of governments to fund services and support sustainable development. Tweet This! It is now available as the latest addition to the GRI Standards, the most widely used sustainability reporting framework.

During 15 years with the Senate Permanent Subcommittee on Investigations, Ms Bean handled high-profile investigations, hearings and legislation on tax avoidance, corporate misconduct and financial corruption.

Setting out why global change is needed in support of tax transparency, Ms Bean said:

“Corporate tax transparency is the next big sustainability task. In 2018, at least 90 hugely profitable US corporations paid no US tax at all – an outrage that is not sustainable morally or in light of the societal investments needed worldwide.

Corporations want better infrastructure, an educated workforce, patent enforcement, trade protection, and more. And some corporations impose enormous costs on society through environmental damage, worker injuries, financial fraud, or worse.

Companies need to pay their fair share, and the new GRI Tax Standard will encourage responsible corporations to do just that. Not only because it’s the right thing to do but because it is in their self-interest to help provide the revenue needed to sustain the economy and restore public confidence in the business world.”

More than 100 people attended GRI’s event hosted at London Stock Exchange, including senior representatives from business, civil society and investment institutions – indicating the high interest from many stakeholders in making transparent tax reporting a reality.

Tim Mohin, GRI chief executive, said:

“GRI’s Tax Standard can be a game changer. For the first time, we have a global standard that can ensure companies demonstrate effectively how they contribute through taxes in each of the locations where they operate. This crucial information is needed if we are to have a well-informed global debate about corporate tax practices.

I thank Elise J Bean for her insights, which underlines the urgency, international relevance and practical application of the Standard. I think companies themselves are recognizing that changes are needed and GRI looks forward to working closely with them, to encourage uptake of the Tax Standard and help them unlock the benefits that come from committing to transparency.”

Download and freely use the GRI 207 Tax Standard

GRI 207: Tax 2019 is freely available for use by any organization.

Tax transparency: Putting an end to tax evasion

Gerasimos — Mon, 23 Dec 2019 09:52:08 +0000

On 5 December 2019, GRI (Global Reporting Initiative) announced the world’s first public reporting standard for corporate tax, which includes country-by-country disclosures. The article below investigates the increasing need for tax transparency and how this need let to the launch of the GRI Tax Standard.

Sustainable development, both nationally and internationally, is essentially based on governments being able to fund infrastructure and services through tax income – including corporate taxes. The latter enable companies worldwide to contribute to the local economies where they produce, store or sell their products and services.

On 3 April 2016, the Süddeutsche Zeitung newspaper revealed the use of offshore financial services and shell companies by certain companies and individuals in order to minimise their tax liabilities. This multi-country investigation became widely known as the Panama Papers and exposed the scale of global business’s tax avoidance, often completely legal.

Multinational companies ought, however, to be transparent to their stakeholders about how much tax they pay, where they pay their taxes, and how the country-by-country taxes they pay relate to the locations where they do business.

Although businesses do normally release some tax information, accessible, reliable data on how much tax they pay and where, can be hard or impossible to find. Corporate tax avoidance, globally, has been estimated at US$500 το US$600 billion each year in lost revenue.

As a consequence of this lack of transparency and widespread tax evasion, investors, governments, civil society, the media and the public around the globe are increasingly calling for tax transparency, including, most importantly, complete and comparable disclosures on a country-by-country basis.

Taking this massive demand for accurate, reliable tax information into account, the Global Sustainability Standards Board (GSSB), the independent entity that oversees the development of the GRI Standards, collaborated, in 2017, with international experts to create the first ever global reporting standard on tax. Subsequently, after a period of global consultation, to gather views from all interested parties, GRI launched the new Tax Standard (known as GRI 207: Tax 2019). Tweet This! Published on 5 December, the Tax Standard is freely available for any organisation to use to disclose their taxes in a transparent way.

The new GRI Tax Standard is intended to promote, through its adoption and use, an open discussion between reporting organisations, government, the public and civil society about tax policies and practices, and on how tax revenues can promote sustainable development.

Major investors, industry bodies, civil society activists, charities, trade unions and many other groups worldwide welcomed the new Tax Standard and the greater transparency and openness it seeks to achieve. They include asset managers Royal London and Hermes, Accountancy Europe, Oxfam, the UN-supported Principles for Responsible Investment, global union federation Public Services International, and civil society groups the Tax Justice Network and FACT Coalition.

To start rebuilding public trust in companies, strengthen corporate accountability and facilitate the informed dialogue stakeholders globally demand, increased openness on tax is key.

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References:

This article is based on published information by Medium. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the publication’s meaning. If you would like to quote these written sources from the original please revert to the following link:

https://medium.com/@GlobalReportingInitiative/tax-transparency-the-time-for-change-is-now-50b1f8699a5b

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