Partner Article

Fair Tax Mark – promoting business tax transparency and fairness

Taxation is high on the list of public concerns about corporate behaviour. Specifically, people want to know that companies are paying their fair share of taxation.

This is not only an ethical issue. Individual taxpayers recognise that, if companies do not pay their fair share, then individuals have to pay more. Against that background, we look at the launch of the Fair Tax Mark.

The Fair Tax Mark was launched earlier this month. It’s a way of recognising and promoting fairness and transparency in the way businesses meet their tax obligations. The intention behind the Fair Tax mark is to provide comfort that a company is open and transparent about its tax affairs and seeks to pay the right amount of corporation tax at the right time in the right place. It’s been described as “the new Fairtrade” and encourages consumers to back the companies that pay what they owe.

The Fair Tax Mark criteria assess the information that businesses provide in order to measure their level of transparency and the quality of their tax disclosure as well as their tax rate. Clearly, this is not a simple matter and requires a considerable exercise of judgement.

Three different criteria are used depending upon the type of business and their circumstances:

1. Businesses that solely trade in the UK;

2. UK-owned multi-national businesses;

3. Foreign-owned multi-nationals with subsidiaries in the first group.

Wisely, after a very substantial amount of groundwork, the Fair Tax movement is currently only assessing companies in the first group. The criteria are subject to an ongoing process of development and are likely to change over time, with other categories added later.

Just as the Fairtrade movement discovered, it takes years to build a recognised and trusted brand. So too the Fair Tax Mark will take a while to establish itself. Nevertheless, we welcome this as a promising step towards greater public transparency and accountability in business taxes.

This was posted in Bdaily's Members' News section by George Bull .