Tax Responsibility and Transparency Index launches to benchmark companies

After 12 months of consultation and development, stakeholders from civil society, business and investment came together on 19 April at the European Parliament in Brussels for the launch of the Tax Responsibility and Transparency Index.

The Index has been co-developed by the Fair Tax Foundation and leading European corporate responsibility business network CSR Europe and acts as a high-bar benchmark for businesses in five key areas of tax conduct.

Paul Monaghan, CEO of the Fair Tax Foundation

Fair Tax Foundation CEO Paul Monaghan introduced the Index to a packed parliamentary room, sharing its design, process and learnings.

The Index enables businesses to benchmark themselves against high-bar, civil society frameworks, pending legislation and pioneering companies broken down by country or sector. This leadership pool is anonymised but participating companies can disclose their scoring, should they wish to.

With 34 questions across the five categories of policy and strategy; management and governance; stakeholder engagement; transparency and reporting; and contribution and narrative, there are 100 points available for businesses to score, with weight given to tougher areas such as public Country-by-Country Reporting (pCbCR) and its accompanying narratives. The scoring process is collaborative, with many opportunities for discussion, and scores close to the mean average can be regarded as a leadership standard (top-scoring companies have so far received scores of around 70), Monaghan said.

The methodology for the Tax Responsibility and Transparency Index is broader than the Fair Tax Mark in that as well as corporation tax, it considers total tax contribution. It also looks at public policy alignment, supply chain and tax controversies. But it doesn’t reinvent the wheel – where a standard exists, such as from GRI 207, the Fair Tax Mark or UN PRI, for example, the Index adopts it using the same terminology, allowing businesses to transfer across with ease.

‘Stay ahead of the curve’

The launch event in Brussels fore-fronted the experiences of participating businesses such as Orsted, Fortum and Vattenfall, which are all Fair Tax Mark accredited. Christian Hjort, senior lead tax counsel at Orsted, said the index was a way for the business to “stay ahead of the curve” and that with a lot of standards beginning to develop in this space, it was useful to be able to use one index that combined them all, allowing comparability. He also highlighted the variety of stakeholders as a driving force of being able to develop a credible product.

This was echoed by Reijo Salo, vice-president of corporate tax at Fortum, who said: “Sometimes we’re talking about tax in a silo…this offered the opportunity to engage with peers but also other stakeholders.”

MEP Paul Tang co-hosted, and opened, the event

Other stakeholders included Alison Schultz, research fellow at the Tax Justice Network, who said the engagement in the lead up to the development of the index was “very fruitful” and had come to a good result – a good example of a pluralistic exchange.

Chiara Putaturo, Oxfam’s EU policy adviser on tax and inequalities, said although the focus of civil society was on changing legislation, it is important to have companies on board. This echoed discussion on the role of policy from the first panel of the day, which explored the current state of tax transparency. Although focused on the action multinational businesses can take to improve their tax transparency, the Index launch event also featured the views of policymakers. It was co-hosted by MEP Paul Tang, who delivered the keynote speech praising the collaboration on the Index and encouraging corporates to use it. “Transparency has been an amazing tool for change,” he said.

He was followed by Benjamin Angel, director, DG TAXUD at the European Commission, who said the ability of tax legislation to pass quickly, and build on the work of the OECD, demonstrates interest in it from member states. The value of transparency has been shown in legislation such as pCbCR, he added, which is an area in which the Index awards points for on all taxes paid. Angel also said it was important for there to be an open and automatic flow of information for beneficial ownership registers – another key component of the Tax Responsibility and Transparency Index.

The launch event was a great success, with a real buzz from attendees and much positively about the importance of tax responsibility and transparency. The Index is now open for business – to find out more, contact

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