E&Y have recommended that Business should be more transparent about their tax policies. Some might see this as a way to drum up more business for the Big 4! But this is what John Dixon had to say as reported by the BBC:
“The public is calling for a clearer picture of the tax policies of organisations, as well as the amount of tax they pay.
“The recent debate around ‘fair tax’ has raised the bar in terms of the expectations of the level of tax information provided by multinational companies. And the public is waiting for a response.”
“The direction of travel appears clear and we see the current position as a tipping point.
“Our view is that, if there is not a step change in the level of voluntary tax transparency reporting, there is a material possibility that mandatory changes will follow.”
Mr Dixon said: “We are not in favour of a one size fits all approach. The concept of tax transparency will mean different things for different organisations.
“Companies will need to form their own views on additional voluntary disclosure and how to get their messages across appropriately. But we are confident that the benefits of building greater trust with stakeholders will far outweigh the cost and resources needed for greater tax transparency.”
Now this is very interesting. We have reached a tipping point but a tipping point into which type of transparency? E&Y are recommending voluntary tax transparency reporting but not one size fits all. So they are opposed to mandatory transparency and one standard.
I have argued for some time that business needs to sort out its strategy in this area and not focus on tactics. Where does business want to be in 5,10 or 20 years time. I agree that a tipping point is here in the UK and Europe and what business needs to propose is a voluntary disclosure code which businesses can adhere to.
Some governments involved in the BEPS project are advocating that business should be more transparent in what it provides to tax authorities – reconciling accounts to taxable profits on a country by country basis. This proposal deserves serious consideration by business.