Governments left in dust as businesses opt for more transparency under new Fair Tax Mark global accreditation

The Fair Tax Foundation today launched its new Fair Tax Mark Global Multinational Business Standard, and announced the accreditation of European energy company Vattenfall, who become the first business head-quartered outside of the UK to be Fair Tax Mark certified.¹

The accreditation scheme going global demonstrates growing eagerness among businesses and investors to exercise responsible tax conduct and voluntarily go beyond government transparency requirements. Investors responsible for trillions of dollars of assets called on the OECD in a 2020 consultation for greater tax transparency measures on multinational corporations, specifically country by country reporting.² But where the OECD has yet to deliver, the new Fair Tax Mark global standard now allows multinational corporations to exercise the extra level of tax transparency called for.

The new global accreditation will also allow businesses to go beyond efforts this year by the EU parliament to crack down on corporate tax abuse that ultimately fell short. Similar tax transparency measures to those called for by investors in 2020 were put before the EU parliament in 2021 but defanged before passing.³ The EU parliament ultimately required multinational corporations to only publish country by country reporting data for the EU countries they operate in instead of all countries they operate in, negating the purpose of the tax transparency measure. The new Fair Tax Mark global accreditation will allow multinational corporations to voluntarily go beyond the EU half-measures by requiring multinationals to report on their activity in all countries that they are present in. The US Congress has legislated for full disclosure, but this has yet to be confirmed by Senate or introduced by direct action of the Securities and Exchange Commission.

The Fair Tax Mark global accreditation will also support multinational corporations to take up the GRI Tax Standard, a tax transparency standard published by global sustainability standards setter GRI and devised in consultation with businesses, investors, civil society groups, labour organisations, accounting firms and tax experts. The voluntary GRI Tax Standard is widely recognised as the most robust standard for public country by country reporting and often urged as the model governments should replicate.⁴

The momentum among businesses and investors reflects public attitudes strongly in favour of responsible tax behaviour among multinational corporations. Recent polling found overwhelming public support in seven leading countries for policymakers to crackdown on corporate tax abuse (87 percent to 95 percent in favour).⁵ Over $312 billion in tax is lost a year to cross-border corporate tax abuse my multinational corporations every year, the Tax Justice Network’s State of Tax Justice 2021 revealed last week.⁶

Paul Monaghan, chief executive at the Fair Tax Foundation said:

“We are absolutely delighted to launch our new Global Multinational Business Standard and announce that Vattenfall is the first business to be accredited against it.

“The internationalisation of the Fair Tax Mark has been driven by approaches from businesses across the world who are seeking accreditation and to stand up for responsible tax conduct. It is no longer enough for a business to claim that their tax conduct is acceptable as long as they are not breaking the letter of the law – in the same way that such a narrow framing of impact would be disparaged if it were to be deployed with environmental and human rights considerations.”

Alex Cobham, chief executive at the Tax Justice Network, said:

“When governments drag their feet on tackling tax abuse, they often tell us they have the interests of businesses at heart. In reality, most businesses do pay their fair share – but they suffer from an unlevel playing field because of the tax abuse of the biggest multinationals. Customers and investors both lose out to that abuse too. That’s why businesses across the world are lining up to proudly display the tax they pay with the Fair Tax Mark and public country by country reporting. Paying your fair share of tax isn’t just the right thing to do, it’s good business sense.”

Fair Tax Mark accreditation is the gold standard of responsible tax conduct, but to date has only been available to businesses headquartered in the UK. With the launch of the new Global Multinational Business Standard, which has taken two years to develop, the Fair Tax Mark is now open to any multinational enterprise in the world.

The Fair Tax Mark is growing robustly in the UK, with over seventy businesses now accredited – including national brands (such as Timpson, Lush and Richer Sounds), listed companies (including SSE, Severn Trent, Marshalls and Gleeson) as well as co-operatives and social enterprises (such as Leeds Building Society, Suma, Epworth Investment Management, Ethical Property, Friendly Soap and Scotmid Coop) and large private business (such as Mace and MAPS Medical Reporting).

To secure a Fair Tax Mark a business should:

• pay the right amount of tax (but no more) in the right place at the right time, according to both the letter and the spirit of the law;
• readily provide sufficient public information to enable its stakeholders to form a rounded and informed view of its beneficial ownership, tax conduct and financial presence (across the world if they are a multinational);
• say what they pay with pride.

-ENDS-

Contact:

• Tax Justice Network: [email protected], +44 (0)7562 403078
• Fair Tax Foundation: [email protected], +44 (0)1615 138165

Notes to editor:

1. Fair Tax Mark accreditation, run by the Fair Tax Foundation and supported by the Tax Justice Network from the outset, is the gold standard of responsible tax conduct, but to date has only been available to businesses headquartered in the UK. With the launch of the new Global Multinational Business Standard, which has taken two years to develop, the Fair Tax Mark is now open to any multinational enterprise in the Vattenfall, headquartered in Sweden, is one of Europe’s largest producers and retailers of electricity and heat, with significant markets in Sweden, Germany, the Netherlands, UK, Denmark and Finland.
2. In 2020, the OECD invited submissions in review of its country by country reporting standard. Country by country reporting, a tax transparency measure designed to expose and deter profit shifting, was first proposed by the Tax Justice Network in 2003. Although initially resisted by the OECD the reporting method was eventually backed by the G20 group of countries in 2013, with the OECD producing a standard for use from 2015. After numerous delays, the OECD finally published partial data in July 2020. However, while the Tax Justice Network’s proposal called for multinational corporations to publicly disclose their country by country reports, the OECD requires multinationals only to privately submit their reports to OECD countries’ tax authorities. Reports collected from multinational corporations are then aggregated and anonymised by OECD countries before the data is shared with the OECD body and published.Submissions to the OECD’s review of it country by country reporting standard showed strong support among investors, as well as academics and civil society organisations, for multinational corporations to be required to publicly disclose their country by country reporting data.

   Last week, Tax Justice Network’s analysis of aggregated country by country reporting data published by the OECD in 2021 revealed that multinational corporations are underpaying $312 billion in corporate tax a year. However, due to the anonymisation of the OECD data it is not possible to identify which multinational corporations are responsible for the tax abuse.

3. For more information, please see “EU shot at tax transparency rattles multinationals’ woodwork but fails to score”; and ‘FACT Coalition Applauds Disclosure of Tax Havens and Offshoring Act Backed by Investors with close to $2.9 Trillion in Assets Under Management’.
4. More information available on the GRI Tax Standard here.
5. The polling, conducted in the USA, France, Germany, Italy, Poland, the Netherlands and the UK, shows unmatched levels of support ranging from 87 per cent to 95 per cent. Participants were asked their views on measures to tie public funds used to bail out companies during the coronavirus pandemic to their record on paying tax, and ending the use of tax havens.
6. The State of Tax Justice 2021, published last week (16 November 2021), reports that countries are losing a total of $483 billion in tax a year to global tax abuse committed by multinational corporations and wealthy individuals – enough to fully vaccinate the global population against Covid-19 more than three times over. Of the $483 billion in tax that countries lose a year, $312 billion is lost to cross-border corporate tax abuse by multinational corporations and $171 billion is lost to offshore tax evasion by wealthy individuals.

About the Fair Tax Foundation

The Fair Tax Mark accreditation scheme was launched in the UK in 2014 and seeks to encourage and recognise organisations that pay the right amount of corporation tax at the right time and in the right place. Tax contributions are a key part of the wider social and economic contribution made by business, helping the communities in which they operate to deliver valuable public services and build the infrastructure that paves the way for growth. Accredited businesses include FTSE-listed PLCs, co-operatives, social enterprises and large private business. A new Global Multinational Business Standard was launched in November 2021, enabling multinationals headquartered outside of the UK to be accredited for the first time. The Fair Tax Foundation operates as a not-for-profit social enterprise and believes that companies paying tax responsibly should be celebrated, and any race to the bottom resisted. Additional initiatives, in the UK, include Fair Tax Week and the Councils for Fair Tax Declaration. https://fairtaxmark.net

The internationalisation of the Fair Tax Mark accreditation scheme is being substantially enabled by the generous support of Luminate.