A FTSE 100 company has strongly denied engaging in tax avoidance, and has offered cautious support for steps toward the multilateral introduction of mandatory public country-by-country reporting of multinationals’ profits and taxes.
Responding to a report by Oxfam International, Reckitt Benckiser Group PLC (RB), a manufacturer of health, hygiene, and home products, said in a July 12 statement that it pays the correct amount of tax in each country where it does business: “As Oxfam recognises, RB’s tax policy is totally legal and the norm for the majority of global businesses. We comply with all our legal obligations and seek to do what is right by all the company’s stakeholders.” Continue reading “FTSE 100 company defends tax policy and backs multilateral push for public country-by-country reporting”
The UK government is disappointed at a lack of progress toward international agreement on public country-by-country reporting of profits and taxes, Prime Minister Theresa May told MPs.
Labour MP Caroline Flint asked during a July 10 House of Commons debate on the G-20 summit what progress the government had made on public CbC reporting. She noted that in June 2016 David Gauke, then financial secretary to the Treasury, told MPs that “if we have not made progress by this time next year on reaching a multilateral agreement, we will need to look carefully at the issue once again.”
“We regularly raise that issue, and we are disappointed at the lack of progress on it,” May replied.
Flint’s intervention followed an annual meeting of the all-party parliamentary group on responsible tax, where Labour MP Margaret Hodge was re-elected as chair. “We are well-resourced this time,” Hodge said of the cross-party group, which was formed in 2015. Read more:
My news story for Tax Analysts, July 12 (paywall)
Members of the U.K. Parliament have been urged not to risk “confrontation” with U.S. lawmakers by breaking ranks on public country-by-country (CbC) reporting, as they prepare to debate for a second time a finance bill amendment that would pave the way for mandatory public CbC reporting by large multinationals.
MPs defeated a similar amendment in June by just 22 votes. Labour MP Caroline Flint’s revised amendment, set to be debated on September 5 or 6, has the support of a cross-party group of 60 MPs.
Then-Financial Secretary to the Treasury David Gauke told Flint during the June 28 debate that the government shared her aims of increasing transparency and clamping down on avoidance. The government had “led the way in calling at an international level for public CbC reports,” he said. But Gauke argued that the amendment was technically flawed and that there would be “disadvantages for the U.K.” if Parliament acted unilaterally.
Read more: My news story for Tax Notes, 3 September (paywall) published by Tax Analysts.
Tax experts have told members of Parliament on the UK’s Treasury Committee that implementation of the actions recommended in the OECD’s base erosion and profit-shifting project faces some difficult challenges and will depend on maintaining an international consensus.
Asked about calls for greater transparency regarding multinationals’ tax, they argued that public country-by-country (CbC) reporting would not necessarily help people decide whether a company such as Google is paying the right amount of tax.
Read more: My news story for Tax Notes, 15 June (paywall) published by Tax Analysts.
A cross-party group of members of Parliament has called on the U.K. government to back an amendment to the 2016 Finance Bill to require multinationals to publish country-by-country reports of their profits and taxes.
Caroline Flint, a Labour MP and member of the House of Commons Public Accounts Committee, secured support for the amendment from 11 colleagues on the 15-person committee as well as two former PAC chairs, Conservative MP David Davis and Labour MP Margaret Hodge. Six of the amendment’s 14 backers are Conservative MPs.
While Flint said that the tide of public opinion is moving toward openness, some tax experts have cast doubt on the value of public disclosure, arguing that it is the task of tax authorities to ensure that multinationals pay the right amount of tax.
Read more: My news story for Tax Notes (paywall) published by Tax Analysts.
Britain’s corporate tax system is “broken”, according to Patrick Hosking, financial editor of The Times (paywall). “Nothing reflects this better than a tiny heart-shaped squiggle that is starting to appear in the advertising of British blue chips.”
The squiggle is the Fair Tax Mark logo, and SSE plc is the first FTSE 100 company to use it. The company has placed advertisements over the past few months in The Times, The Mirror, The Economist and elsewhere. One recent ad says that “at SSE we believe that everyone should pay their fair share of taxes”. Continue reading “Tax is ‘fast becoming the most toxic issue’ for successful companies”
More than 70 politicians and tax transparency campaigners have signed a letter to the Guardian deploring Luxembourg’s decision to bring criminal charges against a former PwC employee believed to have passed to the media confidential rulings awarded by Luxembourg tax authorities.
As The Guardian noted last night, 20 news organisations around the world have published detailed investigations into the tax affairs of several multinationals based on leaked tax rulings that PwC obtained in Luxembourg for some of its clients. Continue reading “Luxleaks tax disclosures serve the public interest – prosecuting the source does not”
Reuters reported yesterday that a survey conducted by PwC showed that “most chief executives globally would support the publication of country-by-country financial information to help stamp out corporate tax avoidance”. If this finding is a fair reflection of opinion among CEOs, it marks a turning point in the tax transparency debate. (I should add that it seems to have emerged in February, when it was picked up by Christian Aid and Richard Murphy.)
The finding seems to have taken PwC by surprise. Page 17 of the firm’s report reads:
“Similarly, and perhaps surprisingly to some, almost six out of ten CEOs (59%) agreed that multinationals should be required to publish revenue, profit and tax disclosures on a country-by-country basis, although 36% of US CEOs (compared with 19% globally) disagreed. That 59% of CEOs agreed is surprising given what are believed to be widely held concerns that mandatory ‘country by country’ disclosure requirements will focus on data that is costly for businesses to generate and is not easy for the reader to understand. Perhaps this reflects the acknowledgement by CEOs that the provision of some kind of meaningful information on tax is a key part of building greater understanding.”
As this conversation on Twitter suggests, the obvious question is “what were they asked?” I did wonder whether the question might have been interpreted by some respondents as relating to the OECD’s development of a template for country-by-country reporting to tax authorities.
This morning PwC press officer Laetitia Lynn has posted a link to the survey data. If you follow the link to “Purpose”, the final question relates to tax policy and administration, and you will see that 59% of CEOs responding agreed that:
“Multinationals should be required to publish the revenues, profits and taxes paid for each territory where they operate.”
“Publish” is the key word here. CEOs are not tax specialists but I think they know the difference between publishing data and sharing it with tax authorities.
As I noted on the old blog last September, the objection to public country-by-country reporting that we hear most is that disclosure would result in more confusion, not less. On the other hand, many businesses with nothing to hide would welcome greater transparency because it would help to restore trust in big business.