Taxation is high on the list of public concerns about corporate behaviour. Specifically, people want to know that companies are paying their fair share of taxation.
This is not only an ethical issue. Individual taxpayers recognise that, if companies do notpay their fair share, then individuals have to pay more.
The Fair Tax mark was launched earlier this month. It’s a way of recognising and promotingfairness and transparency in the way businesses meet their tax obligations.
The intention behind the Fair Tax mark is to provide comfort that a company is open andtransparent about its tax affairs and seeks to pay the right amount of corporation tax at theright time in the right place. It’s been described as “the new Fairtrade” and encouragesconsumers to back the companies that pay what they owe.
The Fair Tax Mark criteria assess the information that businesses provide in order tomeasure their level of transparency and the quality of their tax disclosure as well as theirtax rate.
Clearly, this is not a simple matter and requires a considerable exercise of judgement.
Three different criteria are used depending upon the type of business and theircircumstances:
- Businesses that solely trade in the UK;
- UK-owned multi-national businesses;
- Foreign-owned multi-nationals with subsidiaries in the first group.
Wisely, after a very substantial amount of groundwork, the Fair Tax movement is currently only assessing companies in the first group.
The criteria are subject to an ongoing process of development and are likely to change over time, with other categories added later.
Just as the Fairtrade movement discovered, it takes years to build a recognised and trusted brand. So, too, the Fair Tax mark will take a while to establish itself. Nevertheless, we welcome this as a promising step towards greater public transparency and accountability in business taxes.
George Bull is national chair of Baker Tilly’s professional practices group.
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