Applying Corporate Responsibility to Tax

Corporate Social Responsibility is about how companies manage the business activities to produce general positive impact on society. Companies need to respond to two aspects of their operations.

1. The quality of their management - both in terms of people and processes (the inner circle).

2. The nature of, and quantity of their impact on society in the various areas.

Stakeholders look to the outer circle that what the company has actually done, good or bad, in terms of its products and services, in terms of its effect on the economy, environment and on local communities.

Corporate Social Responsibility is the unending promise by business to behave morally and contribute to economic development while improving the quality of life of the workers and their families as well as of the local community and society at large.

It is clear that taxation is considered and should be considered a significant issue for economic sustainability. But international norms for tax payments did not reach yet at a global level. For the same reason tax cannot be considered a core Corporate Responsibility issue, as human rights, labor rights, environmental principles and anti-corruption. International norms to guide cor¬porations on tax were not yet established.

Paying taxes have continually been highlighted by corporations as a key contribution to societies; however, it has seldom been recognized as part of CR. Indeed most corporations would simply view payment of taxes as a cost issue and thus seek to reduce such cost within the boundaries of national laws.

Companies should consider how their selected approach to Corporate Social Responsibility applies to all aspects of their activity which also includes the management of their tax liability. They should then be in a position to give a reasoned justification of their approach to key tax issues such as the use of tax minimization techniques, which is consistent with their approach to other Corporate Social Responsibility issues....