The 2016 OECD Global Forum on Responsible Business Conduct (RBC) took an important step towards more seriously placing corporate tax at the core of a responsible business practice
For the first time, the forum dedicated a panel to the issue area of responsible taxation. There was no doubt at all, for all the panellists, that it is time to go beyond legal compliance. Representing perspectives from trade unions, investors, NGOs, reporting initiatives and business, the panel gave a clear impression that this issue is on everyone’s agenda.
This is an important conclusion in itself. Even if there seems to be no standard solution for how to become a responsible corporate tax payer. In the discussion paper “Getting to Good ” Oxfam, ActionAid and Christian Aid give examples of what could be part of the approach.
Despite attempts at regulatory reforms at the global level, the international tax system still permits aggressive corporate tax planning. And as long as businesses have the freedom to structure their corporation and (re) allocate their profits as they please, there is also space for tax as a part of good corporate governance and responsible business practice.
Clearly, there is a role for values and responsibility beyond legal compliance to ensure companies contribute by paying their fair share and showing willingness to be accountable for this. Business make choices in their tax planning, and those choices reflect their degree of commitment to responsible business conduct.
The role of the private sector in financing and achieving the new sustainable development goals (SDGs) is clear. One of the most important ways in which the private sector can contribute to sustainable development is through the payment of taxes. Tax revenues from corporation will continue to be critical to the development debate, and thus we expect that the discussion about RBC and tax has really only just begun.
The OECD Guidelines for Multinational Enterprises include a chapter on taxation. This makes it clear that a responsible business model cannot be developed without a responsible tax corporate policy. But the OECD Guidelines’ chapter does not offer clear instructions on how to make it happen.
Unfortunately the panel at the 2016 forum missed an opportunity to discuss its application in detail. Especially in light of the fast pace of reform of the international tax system, this seems a pertinent question. Are the OECD Guidelines useful and in line with the most advanced responsible conduct in this area?
OECD Watch – an international network of NGOs using the OECD Guidelines to encourage corporate accountability – has extensively researched and documented the impact of the OECD Guidelines’ system of National Contact Points (NCPs), and has found that the tax provisions of the Guidelines have been sorely underutilized.
This happens, despite a clear acknowledgement – including by panellists at the OECD RBC forum – of the adverse social and economic impacts aggressive tax planning can have. Why has the tax chapter not been better used when tax payments are at the heart of sustainable business conduct and increasingly linked to human rights as expressed by the UN and others?
The OECD as well as the UN Global Compact should take these trends and the outstanding questions very seriously. Policymakers should think about how they can encourage the frontrunners as well as mainstreaming the issue. Tools to incorporate tax planning in human rights due diligence processes, as well as principles for responsible tax are still lacking. A first step is to enable a space to discuss the developments and bring different stakeholders together to move the agenda forward.
Oxfam IBIS look forward to contributing to such spaces in the years to come, to explore solutions and how to measure the positive impact for the responsible businesses, who are willing to step it up and be open and transparent about their tax payments, as an integrated part of their sustainability strategies and of responsible business conduct.
The Tax Dialogue on corporate responsibility is our way to facilitate this dialogue in Denmark and in other European countries.