Roundtable on Tax Transparency: A necessary responsibility of global corporations
Elena Herrero-Beaumont, director of the International Executive Programme of Global and Corporate Affairs, set the ground for the debate quoting an article recently published in the Financial Times: Political risk is back, the apparent solidity of well-established companies and institutions cannot be taken for granted. Companies need to “engage radically” with society and the state and to go way further than CSR.
A number of issues immediately came to mind. Has there been a real evolution in the past year in terms of corporate tax transparency? Are companies doing enough? What incentives, if any, can encourage them to take the extra step? How can taxpayers and ultimately citizens benefit from such transparency?
Karel Lannoo, CEPS CEO and moderator of the event, introduced the speakers and pointed out that work in the field of taxation is limited and that it is moving at a slow pace. Philippe Lamberts MEP, and member of the Special Commission on Tax Rulings, agreed that not much progress is being made. He attributed this partly due to the fact that national governments in the EU are very close to businesses and are immersed in a tax war.
Carl Dolan, Head of Transparency International Brussels mentioned that for the 4 last years the organization has been tracking corporate transparency and results show there is much room for improvement: the average score for companies, on a range from 0 to 100%, is only 6%. Furthermore, there is also a perception issue since when asking citizens on the impact business has on society, 41% considered this impact to be negative.
Jeroen Lammers, from the Dutch affiliate of Business Europe, considered that legislation is under way and that businesses and governments need to rely on clear rules for a level playing field but also for public acceptance of those rules. He stressed the need to set a fair tax mark and to bear in mind the principle of proportionality, rather than transparency at all costs.
Jerónimo Payán, EMEA tax director, Telefónica, added the industry view. He explained how Telefónica has moved ahead and has introduced compulsory information to the Board of Directors, as well as compliance standards that have enabled the company to have a transparency label/award. However, he said, there are still huge differences between companies, particularly between tech companies and more traditional sectors which result in unfair competition; common standards should be set to have a level playing-field.
As the audience joined in the debate, more questions were raised. In response to the issue of how to convince companies of the benefits to engage further, Carl Dolan pinpointed three incentives to encourage companies to step up their game: regaining trust from society, raising capital from investors and (not) harming developing countries with their tax avoidance. It was agreed that legitimate corporate interests need to strike a balance with a fair landscape and a level playing-field. To have some credibility at a global level, MEP Lamberts added, the EU needs to sort out and clear its own business rules.
In case you missed it, the programme for the event is available here.