Tax morality and tax transparency - an overview 

June 17: Tax directors around the world are shouldering the impact of fundamental changes in attitudes and approaches to tax. For many, gone are the days when tax was solely an expense to be managed.

Whether it is corporate social responsibility, tax governance, enhanced transparency with tax authorities, investors or society holding individuals and businesses accountable for paying a fair amount of tax, these issues are subject to increasingly heated debates.

Corporate reputation management has always been an issue for large global companies. Now the issue of paying a “fair share” of tax is one of the most prominent areas being scrutinized by governments, the general public, and―to a great extent―the media.

Just like corporate responsibility and environmental issues, brand enhancement or damage can occur if there is perception that a company’s tax affairs are overly aggressive or “unfair.” As the public looks to businesses to “do the right thing,” expectations for more transparency are increasing.

It is expected that the trends will continue toward more transparency between taxpayers and the tax authorities, and more disclosure by public companies as to the amount of their tax payments and where those taxes are being paid.

On the other hand, tax systems have not kept up with changes in business models and practices, so there is room for improvement. And countries often use their tax systems to compete for investment dollars and jobs, and to benefit the foreign activity of their own multinationals. Much of the current debate stems from this reality.

A KPMG report considers the following four questions:

  • What are the underlying factors driving the international debate?
  • What is the story so far?
  • What are the areas of focus and likely future developments?
  • How does a company director, senior executive, or advisor best respond?

With reputations at stake, ultimately for senior business leaders it will be a question of watching the developments and planning for a potential dialogue with all stakeholders on their tax matters.

Read a June 2013 report [PDF 716 KB] prepared by KPMG: Tax morality and tax transparency: an overview

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