Monday, October 10, 2011

Tax and Sustainability: A framework for businesses and socially responsible investors

Following last week's blog which highlighted Christian Aid's arguments that tax should become an ethical issue in corporate responsibility debates, we note that they have now produced a new briefing paper making a business case for taking a responsible approach to tax. From an email from Christian Aid:
Tax and Sustainability: A framework for businesses and socially responsible investors aims to engage business and the SRI community in the emerging tax and development debate.

The paper warns that companies which pursue aggressive tax strategies face a higher risk of reputational damage than those that don’t. They also risk costly legal action being taken against them by tax authorities.

We suggest some practical steps which businesses can take to demonstrate their commitment to tax and development. We also suggest ideas for reporting requirements on taxation which socially responsible investors could require of the companies in which they invest.
We also note this encouraging trend:
A 2005 survey of FTSE350 companies suggested that, at the time, most companies had not considered the link between their tax strategy and their corporate responsibility policy. 9 In 2010, when Christian Aid conducted a survey of FTSE100 companies in relation to tax and development, the picture had changed, with a majority of respondents agreeing that ‘payment of tax in developing countries should form a key part of an organisation’s CSR commitment’.
. . .
Advisory firm Corporate Citizenship is eager to point out the risks of not engaging in the tax and development debate: ‘It seems that many companies are sitting tight and hoping that this issue will go away. We believe that the opposite is likely."
With plenty more in there, such as this graphical view of the grey area between tax evasion and avoidance, this will be a useful report.

We have added it to TJN's Tax and Corporate Responsibility page.


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