Tax Governance should wipe out the monetary difference between tax avoidance and tax evasion
The multinational companies like Google, Starbucks, Vodafone or Amazon, who have often been in the news for tax avoidance are not doing something wrong, as long as they disclose in the annual reports the amount they are paying to whom and for what. So that it answers the question on what it effectively pays in taxes and in which country. However global tax disclosures are just the beginning.
The EU commission must create a tax governance think- tank, composed of independent tax experts, researchers and tax authorities to present a short and long term solution that recommend both corporations and authorities with a summary of their views on Tax Governance: including tax risks, tax policy and tax risk management. Such quarterly publications will help demystify the current rumors on corporate tax avoidance and tax planning and start a journey of a uniform tax structure in the EU and all global companies doing business in the EU.
Reduce their effective tax burdens
Stakeholders' emphasis on conducting businesses as tax policy, the alleged tax Governance, is still not directly included in the major international Corporate Governance codes or recommendations.
Even in the face of opposition to tax evasion and tax avoidance more countries are trying to create all kinds of agreeable tax incentives to attract more companies. EU estimates are that a trillion euro in revenue losses due to tax avoidance measures.
Therefore, citizens are turning against companies and governments that allow or take advantage of massive tax reductions. International newspapers continue to be full of articles that describe how multinationals are trying to reduce their effective tax burdens. The stories are about constructing all kinds of complex ownership and holding structures in tax havens for the purpose of paying as little tax as possible anywhere in the world.
Demystify the rumours
Non-governmental organizations (NGOs), such as SOMO, Tax Justice Network, ActionAid, Christian Aid, Robinhoodtaxes.org, are waging war against the behavior of these companies as "antisocial".
There is an extremely authoritarian nature of the discussion on tax avoidance as the debate on tax avoidance evokes a lot of emotions. Tax law will almost certainly change in the coming years. Several changes are being discussed. Some tax oversight authorities' mean that multinationals will only be allowed to perform passive activities in the head office country – this would undoubtedly be a step too far, in this globalized commercial world.
New global and cross border tax regimes
The NGOs have now become a key part of the world of taxation because they believe that tax evasion should be tackled vigorously, but tax avoidance is a different story.
Some local tax mandates are no longer appropriate because they only focus on short term gains of a particular country, while some of the tax structures heavily criticised by the NGO's are perfectly reasonable. Therefore, there is a desire to change the individual tax regimes, to new global and cross border laws, preferably initiated by the OECD and the UN for it to be strictly global.
Responsible tax environment
That which has yet to be changed cannot be used against a company retroactively claiming that they are deliberately avoiding taxes.
It is part of the global shareholder protection and value-adding that a company has a low appetite for tax risks. The lack of global tax regimes encourages an active and sometimes aggressive tax planning. A global tax regime will on the other hand encourage a competitive corporate tax environment in a responsible way.
As a starter this could be explained with either broad statements or a brief description of the summary of the tax vehicles and tools used to meet the announced corporate tax policy in the annual corporate disclosers.
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