{"id":20588,"date":"2013-05-08T10:10:13","date_gmt":"2013-05-08T09:10:13","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=20588"},"modified":"2013-05-08T10:10:13","modified_gmt":"2013-05-08T09:10:13","slug":"ernst-young-concede-the-case-for-greater-tax-transparency-has-been-won-but-want-to-put-every-obstacle-they-can-in-its-path","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2013\/05\/08\/ernst-young-concede-the-case-for-greater-tax-transparency-has-been-won-but-want-to-put-every-obstacle-they-can-in-its-path\/","title":{"rendered":"Ernst & Young concede the case for greater tax transparency has been won – but want to put every obstacle they can in its path"},"content":{"rendered":"

Ernst & Young\u00a0issued\u00a0a report yesterday called 'Tax Transparency: Seizing the initiative<\/a>'.<\/p>\n

Put bluntly, the report says that there shouldn't be a legal requirement to\u00a0deliver\u00a0country-by-country reporting<\/a>, the\u00a0accounts\u00a0reporting system I created a decade ago and which would require that all multinational corporations publish a separate profit and loss\u00a0account\u00a0(or income statement) for each and every country in which they operate.<\/p>\n

I have not read the full report yet - so I will write\u00a0again\u00a0when I have. I have read the press release<\/a>, which says:<\/p>\n

\u201cLack of tax transparency has become firmly linked in the public\u2019s mind with aggressive tax planning,\u201d says Dixon. \u201cAnd, with only six of the FTSE 100 specifically stating that they use no artificial or aggressive tax structures in their report and accounts, it\u2019s perhaps understandable to see how this has happened.\u201d<\/p>\n

\u201cIt\u2019s clear to us that the UK has reached a tipping point and organisations can no longer ignore the calls for greater disclosure. Greater transparency provides an opportunity for companies to tell their stakeholders, from their customers, to politicians and shareholders, about their tax policies and their contribution to the economies in which they operate. We are actively advising our clients to embrace the issue proactively, rather than waiting for legislation to be imposed,\u201d he adds.<\/p><\/blockquote>\n

So let's be clear then, Ernst & Young concede that the case I, the\u00a0Tax Justice Network, Christian Aid, Action Aid, the\u00a0Task Force on Financial Integrity and Economic Development, the TUC and others have made for\u00a0decade\u00a0has been right all along: the case for tax\u00a0transparency\u00a0has now been won.<\/p>\n

And then they say:<\/p>\n

70% of tax professionals against country by country reporting<\/strong><\/p>\n

Country by country reporting of tax payments has already been adopted by the extractive industries and, with support from the EU, is also set to become a requirement for banking entities. However, many organisations are concerned that mandatory enforcement of raw country by country reporting requirements across all sectors would add little, if any, understanding of their tax affairs and could create an administrative burden, whilst also publishing information that could potentially be commercially sensitive or misinterpreted. For example, a recent Ernst & Young survey in the UK, where over half of the respondents were heads of tax, revealed that 70% of tax professionals were against country by country reporting.<\/p><\/blockquote>\n

First then, let me make the\u00a0glaringly\u00a0obvious point that if 30% of those most likely to oppose\u00a0country-by-country reporting - those who would have to comply - now support it then the case for it has in fact been overwhelmingly made.<\/p>\n

Second, the release is wrong and I am sure E & Y know it: the EU has not required\u00a0country-by-country reporting for the extractive industries (unfortunately). It is only requiring disclosure\u00a0of\u00a0limited amounts of tax payment data,\u00a0although\u00a0for banks what is being demanded is much closer to\u00a0country-by-country reporting.<\/p>\n

Third, tax is not the sole reason for\u00a0country-by-country reporting: there are ten reasons that I identify here<\/a>, so to limit the case to just tax is far too narrow a focus.<\/p>\n

Fourth, to argue that admin is a burden is absurd. Indeed in the next paragraph of their release E & Y say:<\/p>\n

\u201cWe aren\u2019t in favour of a one size fits all approach\u201d, says Dixon. \u201cThe 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.\u201d<\/p><\/blockquote>\n

In\u00a0other\u00a0words, they themselves dismiss the admin burden argument.<\/p>\n

So we're down to\u00a0commercial\u00a0confidentiality. Well, very\u00a0politely, that's an absurd argument. A company operating in just one country when\u00a0publishing\u00a0its results discloses all it does in that\u00a0place. Why should a\u00a0multinational corporation\u00a0enjoy\u00a0commercial confidentiality not available to its local competitor? The only explanation available for this argument is the preservation of the monopoly rights of\u00a0multinational corporations that\u00a0grant\u00a0them competitive advantage over smaller companies, and that is a precise and very good reason why they should be forced to disclose - to create a\u00a0competitive\u00a0level playing field for all business. E & Y should be ashamed of themselves for putting forward such an anti-competitive argument.<\/p>\n

As E & Y conclude:<\/p>\n

Greater tax transparency inevitable<\/strong><\/p>\n

\u201cIf there isn\u2019t a step change in the level of voluntary reporting it seems likely that mandatory changes will inevitably follow. By seizing the initiative now, organisations can help shape a workable outcome and start to rebuild the public\u2019s trust in UK business,\u201d concludes Dixon.<\/p><\/blockquote>\n

I\u00a0welcome\u00a0the fact that E & Y have conceded that change is now inevitable. I just deeply regret the fact that they are working so hard to ensure that the world's 99% cannot\u00a0benefit\u00a0from it by using, in effect, the\u00a0patronising\u00a0argument that we will not\u00a0understand\u00a0what\u00a0country-by-country reporting will say. For that reason I hope David Cameron ignores all they said when they\u00a0visited\u00a0him\u00a0to present this report yesterday.<\/p>\n

I am also open to meet him any time if he wants to hear the real story of what this is all about.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Ernst & Young\u00a0issued\u00a0a report yesterday called ‘Tax Transparency: Seizing the initiative’. Put bluntly, the report says that there shouldn’t be a legal requirement to\u00a0deliver\u00a0country-by-country reporting,
 Read the full article…<\/em><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[79,60],"tags":[],"class_list":["post-20588","post","type-post","status-publish","format-standard","hentry","category-country-by-country","category-ernst-young"],"_links":{"self":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/20588","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/comments?post=20588"}],"version-history":[{"count":0,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/20588\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/media?parent=20588"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/categories?post=20588"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/tags?post=20588"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}