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Big companies should become more transparent over tax issues

March 2014

Multinationals should be compelled to publish their revenues, profits and taxes paid in every territory where they operate, chief executives of large UK businesses have told a survey.

Two-thirds favoured transparent publication and 77% agreed that tax authorities around the world should then share among themselves the information they hold on companies. Worldwide 58% supported this second view.

The business bosses believed that if the UK government accepted the proposals, tax evasion and the tax avoidance practised by such companies as Starbucks, Amazon and Google would be more difficult.

At last year’s G8 summit the UK government committed itself to making country-by-country reporting available but has rejected calls for the information to be public.

The response shows the UK government lags behind business leaders in support for corporate transparency, said the researchers.

The survey, involving 1,344 interviews with chief executives in 68 countries, was conducted by PricewaterhouseCoopers, the London-based multinational professional services consultancy.

Alex Prats, Christian Aid’s principal economics justice adviser, found the survey “intriguing”, suggesting that most of the chief executives believed businesses should be more open about their finances, and that this could help to reveal whether they are paying the tax for which they are liable.

He said: “One interpretation of chief executives’ responses is that most of them support at least some form of … country-by-country reporting. That would give the public greater information about companies’ activities and help tax authorities to detect when firms might be artificially shifting their profits into tax havens.

“Such profit-shifting is draining tax revenues from the UK and also from developing countries, which need the money to fund public services.”

Christian Aid, which has campaigned for country-by-country reporting since 2008, estimates that tax avoidance deprives developing countries of $160bn (£96bn, €118bn) a year.

The proposed changes could result in larger UK tax liabilities for coffee house chain Starbucks, which is now paying £20m ($33m, €24.4m) by writing off some deductible bills, and for Amazon and Google, which have European headquarters in Luxembourg and the Irish Republic respectively and benefit from those countries’ lower corporation tax.

The pressure has been intensified by a bookshop company, which delivered a 170,000-signature petition to the UK government last year demanding an end to Amazon’s tax avoidance.
 




Global | Tax Avoidance

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