A visiting Martian reading the media stories, NGO campaigns and political comment on corporations and tax might well conclude that Earthlings have only one tax – Corporation Tax.
Wrong!
As we at Corporate Citizenship have been saying for quite some time, the corporate tax issue is about all the taxes a company pays – that includes things like employee taxes (national insurance in the UK), sales taxes and land rates.
Most of the OECD’s proposed actions are corporation tax-related. This is unsurprising as it is the taxes where most of the (alleged)* abuses are.
Most, but not all.
Here is one that addresses sales taxes: “to ensure the effective collection of VAT/GST with respect to the cross-border supply of digital goods and services. Such work will require a thorough analysis of the various business models”.
So that’s a lesson for all companies. Corporation Tax and your policies on it are important but just part of the puzzle. Scrutinise your practice across your whole tax portfolio. Communicate about all the relevant taxes you pay.
* Delete or not according to ideological preference
Note: This blog addresses issues raised by OECD’s proposed Action 1. Action 1 is scheduled to be completed by September 2014. For more on Corporate Citizenship’s views on tax see our paper Tax as a Corporate Responsibility Issue