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Reports 14 Mar 2006

Taxing Issues

Responsible business and tax

By Seb Beloe and Geoff Lye

Economic issues have long been the poor-cousin within the corporate responsibility debate. For many years, economic issues were considered synonymous with financial ones and were widely considered to be well managed by companies and their stakeholders alike.

Companies need to do more than simply manage risk, and instead treat the payment of tax as a key part of their social contract.

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But, as issues like fair-trade, fair-pricing and fair wages have hit the headlines, so it has become clear that economic issues are in fact not well understood by most companies. Whether the issues are associated with fuel poverty in the energy industry, fair wages for suppliers in the retail industry or fair prices for pharmaceutical drugs it has become clear that in many respects economic issues represent a critical dimension of the corporate responsibility agenda.

And tax is no different. The Taxing Issues report explores how different stakeholder groups treat the issue and not only looks at the business case for reducing levels of tax risk, but also argues that corporate responsibility demands that companies do more than simply manage risk, and instead treat the payment of tax as a key part of their social contract. The report suggests that as the issue grows in profile, companies that take a passive approach to their responsibilities in this area will find themselves exposed to significant business risk.

This first study of the link between corporate responsibility and tax concludes by providing constructive guidelines to assist companies wanting to test their own tax policies and practice.

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