Tax avoidance: the role of large accountancy firms - Public Accounts Committee Contents


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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Prepared 26 April 2013