Fair Tax Mark and the Tax Responsibility and Transparency Index: What’s the difference?
The Fair Tax Foundation have been awarding the Fair Tax Mark to organisations paying their fair share of tax for ten years. The Mark is the gold standard of responsible tax conduct and more than 250 distinct trading businesses are now proud to say they are accredited with it.
This year, along with leading European corporate responsibility business network CSR Europe, we launched the Tax Responsibility and Transparency (TR&T) Index. This pioneering tool allows multinational businesses to benchmark themselves against high-bar civil society frameworks, pending legislation and pioneering companies in five key areas of tax conduct.
So, what’s the difference between them?
Based on a set of standards drawn up following a decade of extensive consultation, the Fair Tax Mark verifies that a business’s corporate tax conduct and public reporting has reached a gold standard. The Fair Tax Mark label is a clear and simple way to communicate that a business pays the right amount of tax, in the right place and at the right time. It is to tax what the Fairtrade label is to sound sourcing.
Companies and organisations of all sizes from across the world can apply for Fair Tax Mark accreditation and join a growing movement of listed PLCs, global multinationals, co-operatives, social enterprises and more that are paying corporate income tax responsibly.
Securing a Fair Tax Mark will usually take a number of months, and will likely require adjustments to policy, governance and/or reporting in the first cycle. However, it is quick and easy to begin, with the vast bulk of the initial workload falling on our assessors, who will trawl through all the business’ information that is already in the public domain. The Fair Tax Mark is subject to annual renewal and re-confirmation.
The TR&T Index is the new kid on the block, and is essentially a benchmarking tool. It can be used by businesses setting out on a responsible tax journey, or by leaders who want to see how they compare with the very best out there. Unlike the Fair Tax Mark, it is currently only available to multinational companies, albeit of all sizes. The Index is a high-bar benchmarking tool that can be used to rank how a business’s tax responsibility and transparency compare to current best practices and an anonymised pool of fellow Index participants/peers.
It comprises some 30 questions across these categories and there are 100 points available to score. Businesses can opt to publicise their final point total and ranking should they wish to. In order not to reinvent the wheel, criteria for the Index build upon existing best practice, such as the public Country-by-Country Reporting recommendations of GRI 207.
Find out more about the Index process here.
The TR&T Index is ideal for businesses that are setting off on their tax responsibility and transparency journey, and for whom Fair Tax Mark accreditation would as yet be too challenging. The Index scorecard will facilitate a robust internal discussion on where a business is currently at, and provide options for it to consider for further improvement.
Having said that, Fair Tax Mark accredited businesses, or those that would qualify for the Mark, may also wish to benchmark themselves against their peers and high-bar civil society standards with the TR&T Index, enabling them to fine tune their already excellent performance, and to stay ahead of the pack.
A business is free to disclose its Index scoring, but it is expected that many businesses will not initially do so. Undertaking a TR&T Index assessment will usually take a number of weeks. This could be a one-off exercise, or something repeated on an ad hoc basis.
Is there an advantage to pursuing both?
For businesses whose tax conduct and disclosures have reached an advanced level, particularly in areas such as public Country-by-Country Reporting, the Mark and the Index are complementary. Fair Tax Mark businesses also receive a discount on Index assessments to recognise their pre-existing accredited status and commitment to responsible tax conduct.
Having the Fair Tax Mark can also boost Index performance in various areas as it demonstrates (among other things) that a business has sought independent verification of its tax-related disclosures and reported in line with an established civil society standard.
In both cases, the process starts with an enquiry, after which a member of the Fair Tax Foundation’s tax team will reach out and begin engagement. So, to start a conversation with us about the Fair Tax Mark, enquire here, and for the TR&T Index, enquire here.