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A groundbreaking initiative has emerged onto the corporate landscape: the Tax Responsibility and Transparency Index. This innovative benchmarking tool promises to revolutionize the evaluation of companies' tax practices by aligning them with global standards and regulations. With its holistic approach, it aims to instil a culture of responsible tax conduct among businesses of all sizes.
At the core of this index lies a meticulous assessment of various dimensions of a company's tax behaviour. From adherence to legislation to the intricacies of supply chain conduct, from scrutinizing public policy and lobbying efforts to navigating tax controversies, and from advocating for comprehensive Country-by-Country Reporting (CbCR) to embracing transparency in tax payments—all facets are meticulously considered. Drawing insights from a diverse array of sources, including the European public CbCR recommendations of Global Reporting Initiative 207, Fair Tax Mark's tax reconciliation disclosure guidelines, UN Principles for Responsible Investment, and OECD Guidelines for Multinational Enterprises on Responsible Business Conduct, this index presents a comprehensive framework for evaluating tax practices.
The genesis of this initiative stems from a collaborative effort between CSR Europe, a prominent European business network championing corporate sustainability and responsibility, and the Fair Tax Foundation, a renowned UK organization accrediting businesses with its prestigious Fair Tax Mark for exemplary corporate income tax behavior. According to Spyros Perikleous, CSR's esteemed senior project manager, the versatility of the index is its hallmark. He envisions companies leveraging it for self-assessment, showcasing commendable tax conduct, and gleaning insights from industry peers.
Perikleous underscores the pivotal role of communication in both internal and external spheres concerning companies' endeavours to enhance their tax practices. As part of the participation process, companies will be subject to a nominal fee to cover the costs associated with benchmarking. Additionally, the index offers an option for annual participation, which comes with enticing discounts. Perikleous suggests a dynamic approach, wherein companies may engage periodically for assessment, allowing for iterative improvements in their tax conduct over time.
The formal inauguration of the Tax Responsibility and Transparency Index took place at the European Parliament on April 19th, marking a significant milestone in the realm of corporate tax accountability. This unveiling comes on the heels of a similar initiative introduced by international tax giant WTS Global—the Tax Sustainability Index (TSI)—which made its debut in October of the preceding year. The TSI, akin to its counterpart, furnishes organizations with a benchmarking system to gauge their tax sustainability vis-à-vis industry peers. As Perikleous aptly notes, the post-launch deliberations will centre on charting the most prudent course of action going forward.
By fLEXI tEAM