Global trade union federation Public Services International (PSI) indicated its support for the new Global Reporting Initiative (GRI) tax standard launched today and called on businesses to implement it.
The tax transparency standard was developed by the GRI in consultation with a wide range of stakeholder groups and is now supported by investors, trade unions, civil society and academics. Trade unions noted that the standard had widespread support including from investment funds which collectively manage more than $10 trillion USD in assets.
PSI Assistant General Secretary, Daniel Bertossa said:
“We expect this new standard to be implemented by all multinational corporations. Only tax avoiders would not be willing to implement a transparency measure that has such widespread support. Recent tax scandals mean that people just don’t believe corporations anymore when they say they are paying their fair share in taxes - they must demonstrate it by publishing in accordance with this new independently approved standard. The most important social responsibility for corporations is to pay their fair share in tax.”
The new standard requires multinational corporations to be open and honest with the public about where they are making their profits and where they are paying their taxes. The Global Reporting Initiative - an independent organization that creates reporting standards for businesses and governments - developed the new Tax Standard in consultation with civil society, unions, governments and the private sector. Dozens of PSI affiliates participated in the consultation and all submissions supported proposals for greater tax transparency.
The Standard goes well beyond other attempts such as those developed by the OECD and most importantly requires companies to publish the information so that everybody knows what the company is doing. The OECD initiative has been widely criticised for being secret and for other technical problems.
Alex Cobham, Chief Executive at the Tax Justice Network and author of the newly published The Uncounted, said:
“There are a number of flaws with the OECD standard including the lack of reconciliation of the reported data with companies’ consolidated financial statements – so no first-level check on consistency is possible. Further, the OECD standard does not separate out related party transactions – so all the data is skewed by internal dealing that has no impact on group profitability, and the OECD standard does not include key variables such as the value of tangible assets in each jurisdiction.”
The Standard’s release comes as politicians around the world are being forced to commit to meaningful corporate tax reform, following widespread public outrage around tax abuse. Just last week 12 European countries failed to support similar transparency measures more than three years after the European commission promised to expose multinational corporations’ tax avoidance measures following the Panama Papers revelations. The proposal would have made country-by-country reporting mandatory for companies with an annual turnover of more than €750m.