Tax needs a public face

After successfully pushing its argument to make tax a boardroom issue, KPMG
has taken the debate a step further with the release of a new discussion paper
on tax governance.

In the document KPMG argues that the focus on tax should not stop at senior
boardroom level, but extend to communicating a company’s tax policy to
shareholders, unions, NGOs and regulators.

‘The initial focus was on making tax a priority internally, but that has
shifted to external communication of how tax is managed. There is far more
interest in tax from pressure groups and authorities,’ said KPMG’s global head
of tax Loughlin Hickey.

KPMG’s paper follows a series of high profile international disputes between
tax authorities and multinationals. In the US GlaxoSmithKline paid the Internal
Revenue Service (£1.8bn) to settle a case, while in the UK Vodafone has been
challenged by HM Revenue & Customs over a potential £2bn tax liability.

These events have prompted demands from shareholders for better tax
disclosure while NGOs and other lobby groups have begun monitoring tax
compliance to ensure that companies are not shirking their responsibilities to
society by failing to pay their fair share of tax.

Hickey said businesses needed to be more transparent about their tax affairs
to outside stakeholders, a culture change that would require better
communication and clear tax policy direction: ‘Companies need to explain what
tax strategy they have in place in a insightful and consistent way,’ Hickey
said.

Tax activist Richard Murphy pointed out that such intentions could never be
realised as long as companies were determined to pay as little tax as possible:
‘KPMG can’t avoid the argument that tax efficiency is what it’s all about. To
put it another way, what does this document change?’ Murphy said.