A Future-Fit Business commits publicly to a responsible tax policy, and works continuously to ensure that it lives up to this policy, across all its areas of business.
What this goal means
Governments require tax revenue to fund critical services upon which society and business depends. Companies have an obligation to their shareholders to be diligent in their approach to tax payments. This goal recognizes the fact that through taxation any company must also contribute to the infrastructure it utilizes and relies upon for its success (e.g. transport networks, legal system, healthcare, education, public utilities) and even its existence, meaning that these outcomes are not at odds with each other.
To be Future-Fit, a company must:
- Commit publicly to a responsible tax policy;
- Adopt a transparent approach to tax reporting; and
- Not deliberately seek ways to obey the letter but not the spirit of regional tax laws.
Why this goal is needed...
Though legal, tax avoidance strategies allow companies to circumvent paying their fair share.
Losses due to tax avoidance cost an estimated $100-250 billion annually, representing 4-10% of global corporate income tax revenues.
Taxation is a key contributor to the public’s distrust of business.
38% of 7,600 people surveyed across the G20 countries were distrusting of business leaders about tax.
Both developed and developing countries are vulnerable to tax losses through profit shifting.
Revenues from multinational companies are particularly important to government budgets in developing countries – where they represent 10% of total government revenues – compared to 5% in developed countries.