Public services are under immense strain in many countries in the wake of the pandemic, with soaring inflation adding to the pressure. Against this backdrop, it is vital that tax burdens are distributed proportionately, rather than falling on the most vulnerable segments of the population. However, some multinational companies employ aggressive tax practices to minimise their tax payments, meaning that governments must make up the revenue shortfall by increasing the burden on individuals, or borrowing more.
Since 2020, G20 leaders and governments have enacted a sweeping range of tax reforms. Aggressive tax practices may lead to investigations by regulators, resulting in fines or retrospective clawback of underpaid tax. A company’s reputation and social licence to operate may also be damaged if it is thought not to be paying its fair share.
We have been engaging with companies on tax transparency and fairness in line with our engagement plan since 2016. This includes companies in the technology, mining, consumer staples and pharmaceuticals sectors. Our engagement expectations are focused on four critical areas: tax policy, governance, stakeholder engagement and transparency.
Read the full article in our Q3 2022 Public Engagement Report.