In addition to the Coronavirus Job Retention Scheme, a 12-month business rate holiday and a new lending facility from the Bank of England, some companies have started begging the government for their own bespoke bailouts. Their cries have so far gone unanswered. But that may change.
Tax avoidance activists have thus started focusing on conditions that ought to be met before any money starts being handed out. If a company is taking from the depleted public purse when it’s in a crisis, it should definitely be putting back into it once the profits start rolling in again.
Some countries have already stated that companies that make use of tax havens will not be receiving government money, including Denmark, France and Poland.
However, this is less good than it looks – it is all based on the EU’s tax haven blacklist which has been extensively criticised for being too weakened by political gaming to be meaningful. It does not include significant and well-known tax havens like Bermuda, the British Virgin Islands, and the Netherlands.1
The Fair Tax Mark campaign
Ethical Consumer spin off the Fair Tax Mark has thus launched a campaign demanding that all bailouts not only come with tax conditions, but that they actually have sufficient teeth to be able to get through a Dutch Sandwich.
It demands that in order to qualify for financial bailouts, a business should:
• Say no to tax havens and tax avoidance. Companies must publish a binding tax policy that renounces profit shifting and commits to declaring profits in the place where they arise. It should be subject to an annual audit, and be the responsibility of a designated board director.
• Lift the lid on income and tax around the world. The parent company must publish consolidated annual profit & loss accounts, and detail all corporation tax payments (total, current and deferred). All multinationals must disclose figures on a Country-by-Country basis. A narrative must be provided to explain any deviations from the headline tax rate(s).
• Disclose who ultimately profits. The ultimate beneficial owners of the business, and those with significant control, must be disclosed publicly.
We will be publishing more on companies and tax as the lockdown continues. Someone is going to pay for this crisis, and we need to make sure that it is those who can afford to.