Institute for Financial Transparency

Shining a light on the opaque corners of finance

7
Apr
2017
0

Ending Corporate Tax Avoidance

Norway’s sovereign wealth fund has come out in favor of companies paying taxes where the economic value of their revenue is generated rather than shifting earnings to tax havens.  The fund takes the position the way to end corporate tax avoidance is by requiring companies to disclose their taxes on a country by country basis.

As Bloomberg reported,

“Corporate taxes play an important role in the public finances of developed countries and may be even more critical in developing ones,” the fund said. “Tax is one of the ways in which businesses contribute to the societies on whose legal and financial infrastructure they rely for the orderly execution of their activities.”

It is pretty clear when a company books most of its profits in Ireland while most of its sales and employees are in the US the company is engaged in the type of tax avoidance the fund thinks should be eliminated.

The call for better disclosure of where taxes are paid and how much is paid fits the Transparency Label Initiative’s core mission.  This mission is to ensure firms disclose all the information investors need to know what they own or are thinking of buying so investors can make a fully informed investment decision.

Going forward, tax disclosures will be included in the determination of whether or not a company qualifies for a label from the Initiative.