UK Government lagging behind business leaders on transparency

By agency reporter
February 10, 2014

The UK government is lagging behind business leaders in its support for corporate transparency, a new survey suggests.

The survey, by PricewaterhouseCoopers (PwC), found evidence that most chief executives support reforms which would make it harder for multinationals to dodge tax in the UK and abroad – reforms which the UK government has consistently rejected.

Two-thirds (66 per cent) of the CEOs of large UK firms surveyed agreed that "multinationals should be required to publish the revenues, profits and taxes paid for each territory where they operate."

PwC’s research, which involved 1,344 interviews with CEOs in 68 countries, also found that across all the CEOs surveyed, 59 per cent supported the requirement.

Alex Prats, Principal Economic Justice Adviser of the UK based churches' global development agency Christian Aid, said: "These are intriguing findings. They suggest that of the company leaders surveyed, most believe businesses should be more open about their finances, which could help to reveal whether they are paying the right amount of tax.

"One interpretation of CEOs’ responses is that most of them support at least some form of an accounting reform called country-by-country reporting. That would give the public greater information about companies’ activities and help tax authorities to detect when firms might be artificially shifting their profits into tax havens to lower their tax bills.

"Such profit-shifting is draining tax revenues from the UK and also from developing countries which need the money to fund public services, just as we do here in the UK", he said.

Christian Aid has campaigned for the UK and other countries to introduce country-by-country reporting. The campaign began in 2008, when the charity estimated that developing countries were losing $160 billion in tax revenues. At the G8 summit last year, the UK government committed to making a form of country-by-country reporting available to tax authorities but it has resisted calls to make this information public.

This is despite overwhelming public support for major companies to be more financially transparent. A ComRes poll for Christian Aid (published in August 2013) found that 87 per cent of respondents wanted multinationals’ accounts to be more transparent and publicly available.

"While PwC’s UK findings are based on a small sample of only 43 UK Chief Executives of companies with more than 500 employees or revenues of more than $50 million, the survey suggests that businesses may be willing to go further than the Government", added Mr Prats.

"The PwC survey raises interesting questions for the UK government, which seems to assume that business will always oppose moves for greater transparency. The survey seems to shows that business understands that moves to greater transparency are inevitable. Christian Aid believes this is yet another reason to introduce public country-by-country reporting in the UK and press for its adoption by the EU and G20 countries, without further delay", he concluded.

PwC’s survey also revealed strong support among UK chief executives for tax authorities to share the information they hold on companies, with 77 per cent agreeing that "it is appropriate for tax authorities around the world to share freely information they have on companies amongst themselves." Among CEOs globally, 58 per cent agreed with the statement.


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