Fair Tax Mark Multinational Criteria Open Consultation
Phase two of the Fair Tax Mark is here. The 26th of June sees the unveiling of our draft assessment criteria for multinational companies.The draft document, available for download here, will form the basis of our approach to how we accredit as Fair Tax larger companies that are based in the UK and have operations abroad.
The Fair Tax Mark is an evolving and consultative project and we are using this blog to warmly invite feedback on our draft. Please send comments to firstname.lastname@example.org by the 10th of July. A summary of responses received will be published in due course.
What do the criteria do?
As with the UK-only version launched back in February, the Fair Tax Mark criteria are designed to reward multinational companies that are proud to be playing fair on tax.
A multinational with a Fair Tax Mark can demonstrate that it is paying a fair share and has a progressive tax policy to the many thousands of consumers and investors that care about this issue.
Such companies do exist and we believe that their ethical choices deserve recognition – especially as cross border trade provides many more opportunities to exploit legal loopholes and to minimise tax bills across different countries.
We are already working with a well-known large company helping them to improve how they communicate their positive decisions on tax.
How do the criteria work?
The multinational criteria are designed to be consistent with our UK-only version: they emphasise public accountability and cover the same key issues of transparency, tax rate, policy and disclosure. However, there are extra questions and points available to reflect the differences in structure and complexity of the two types of companies.
The multinational criteria:
1. Reward transparency – points are given for basic information on what the company does, where it trades and whether it is contactable. These are the foundations of accountability.
2. Reward country-by-country data – points are given for extra information that a company provides either for each subsidiary that it owns or alternatively consolidated by country. The Organisation for Economic Cooperation and Development is likely to recommend that companies produce this data when it publishes its report in September 2014. We offer the chance for companies to get ahead of the curve and make this information public.
3. Reward a progressive tax policy and how the company manages and complies with it – points are given for clear statements a company makes about paying the right amount of tax in the right place at the right time, for having a director responsible for this policy, for reviewing the policy regularly and finally for complying with it. Compliance is indicated via proof that a company is not using tax havens for tax avoidance purposes.
4. Reward a tax rate close to that expected and/ or a full and detailed explanation of any difference – points are given for paying near to the statutory amount of tax but if a company has a lower tax bill due to the legitimate use of allowances and reliefs, or if the rates are lowered by differences in foreign tax rates, it can still score points by offering numerical and written explanations of why this is the case, including notes on when it might pay more tax in the future.
As is the case with the UK version, the Fair Tax Mark multinational criteria scoring system aims to be progressive, rewarding companies as they improve year on year.
Viewed as a whole, the criteria represent an ideal of fair and transparent tax reporting and behaviour. Although we want companies to work towards this ideal eventually, we recognise that few will achieve it straight away. So we have set the threshold at 65% to achieve the Mark.
What makes us different?
The Fair Tax Mark is a totally independent, non-for-profit Community Benefit Society. We work towards a future where all businesses are proud to contribute their fair share of tax to society and have the transparency to prove it to all their stakeholders. In the process, we listen to all sides of the tax debate: business, the professions, civil society and the general public. We have also received support from across the political spectrum.
Our criteria are developed by our committee of professional and academic tax experts who offer their time for free.
A real game-changer?
The Fair Tax Mark UK version is already helping responsible businesses and ethical consumers.
Our fantastic Pioneer companies proved that forward-thinking businesses are willing to go the extra mile to prove they play fair on tax. A steady stream of companies are following their example.
With the multinational criteria, we are taking Fair Tax Mark to the next level. When progressive multinationals start showing that they too are willing to step up their game, the excuses offered by those who choose to abuse the system will be proven to be nothing more than what they are, excuses.
We believe that fair tax is at the heart of society. We are very excited about the prospect of expanding the movement of companies that share our view and that make a commitment to contribute to every country where they operate.
Draft criteria available for download here