Tax Transparency Benchmark 2019

"In 2019, many companies are still not in sync with their public images. After the financial crisis and revelations of shady tax hideouts, less than 40% of Dutch citizens find large corporations trustworthy. I wish to reiterate Paul Polman’s point in the introduction, namely that taxation ensures society can function. When citizens feel that this burden is not shared equally, trust diminishes. Thus, 2019 marked a year of turmoil for Dutch companies regarding their taxation. Three large companies appeared before a parliamentary committee to explain their tax payments (or the lack thereof) to the Dutch Government. We see that public and political scrutiny of companies’ financial moral is increasing. Companies with tax operations that are not aligned with their Environmental Social Governance (ESG) see themselves ‘on the back foot’ in the press and social media. For example, not paying tax in a country due to artificial structuring followed by (deductible) donations for charity in that same country leads to public scorn. Politicians will then have to respond. If they don’t, citizens may feel that they lack the power to hold global corporations accountable and lose trust. If they do, it depends on the quality of the political response (laws and regulations) whether society is indeed served in the long term with a sustainable tax infrastructure. We all have a responsibility in the field of sustainable tax.

It is our conviction that transparency can fix this issue. This is why we have put so much effort into carrying out this research for five years now, and with success. We have seen company scores improving. In our first benchmark published in 2015, companies averaged 25% on our six Good Tax Governance Principles. In 2019, benchmarked against a more stringent methodology, companies average 43%. What’s more, leading companies in our benchmark have never achieved such a high score before. The top 10 companies now achieve, on average, 76%. In 2015, the 10 best performing companies attained 54% on average. Some companies now also publish country-by-country reports that show where they pay taxes and where they add value to their company. The financial sector is leading in this regard, and we hope to see advancements in other sectors soon.