3 The transparency of companies' tax
affairs
17. There is too much secrecy over the amount
of tax companies pay and the way that it is calculated. We believe
that companies would behave better if there was more transparency
over their tax affairs. In our evidence session held on 12 November
on the tax affairs of Starbucks, Google and Amazon we heard about
secret 'sweetheart' deals between a multinational company and
a tax authority in another country, in which the company was given
a favourable tax treatment if they agreed not to reveal the details.[40]
18. The four firms all agreed that greater openness
and transparency are key to restoring people's trust in the fairness
of the tax system, but there is no consensus on how this might
be achieved.[41] Ernst
and Young told us that it did not believe that this could be achieved
by requiring companies to file their tax returns alongside their
financial accounts, as tax returns are too long and complex to
offer transparency. It told us that the information needs to be
condensed. It favoured greater information in companies' statutory
accounts, consistent with an existing trend towards greater transparency
and would welcome such an approach.[42]
19. The four firms did not support the proposition
that multinational companies should report their turnover, profit
and tax on a country-by-country basis. Deloitte cited FTSE 100
companies' concerns about the costs and complexity of gathering
this data and commercial confidentiality. KPMG told us that even
a trained tax professional would not necessarily be able to understand
the tax position from this data alone. For example, a company
might be paying no tax in a country because it is making significant
investment and getting tax relief on those investments. Both felt
there was a better way of explaining companies' tax positions.[43]
Whatever form it takes, greater transparency needs to be provided
quickly and, as recommended in our Nineteenth report, reporting
should be mandatory.[44]
40 Committee of Public Accounts, HM Revenue & Customs:
Annual Report and Accounts 2011-12, Nineteenth Report of Session
2012-13, HC 716, December 2012, Qq 285-288 Back
41
Qq 201-209, 215 Back
42
Qq 210-212 Back
43
Qq 213-215 Back
44
Committee of Public Accounts, HM Revenue & Customs: Annual
Report and Accounts 2011-12, Nineteenth Report of Session 2012-13,
HC 716, December 2012, Recommendation 1 Back
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