Blog: From Tax Avoidance to Corporate Engagement & Support

Recently we’ve learned how diligently companies avoid paying corporate income taxes — federal, state, local and foreign. We’ve become familiar with words like ‘offshore tax haven structures’ and my favourite: ‘tax holiday’ (that’s in African countries, where companies don’t need to pay tax the first 10 years).

Companies -quite often companies that position themselves with Green, C2C, Co2, CSR or Fair Trade initiatives- use all kinds of creative structures of deception and disguise to get around tax laws.

One of the most revealing infographics I found was this one, made by NY times:

tax avoidance infographic NYtimes(Click to go to the original infographic, and check out your favourite US brands.)

Here’s one of my favourites out of that list:

ford

I’m using this example on purpose because the renovation of the Ford River Rouge plant is an example of what is often referred to as ‘circular economy’; a strategy focused on getting the ‘Green Business Case’ on the agenda.

I’m not saying the Ford Green Roof isn’t a great case but clearly, when there is such a lack of what I call “Corporate Engagement & Support”, we’re not there yet.

What does it mean, when a company avoids paying tax?

Let’s be real, like you I’m no hermit. So I do know that there are a lot of things to complain about when it comes to the execution of our tax systems. We do need to look at how to change that.

But the issue I want to raise here today is what happens when companies take every possible measure to avoid paying taxes: they are putting the costs of society on to others. The decline of corporate-tax collection in recent decades has contributed to society’s budget deficits, and because of that to rise of other tax levels like VAT.

Each year the EU misses 1000 milliard Euro of public money because of corporate ‘tax avoidance’ strategies.

In other words:

Tax avoiding companies are co-responsible for how society fails in taking care of the homeless, the jobless, elderly people, education, health care, etc. They also contribute to ordinary citizens having to spend a larger part of their income on basic goods, because of rising VAT – something that usually hits the poorest the hardest.

Tax avoidance is about inequality and exploitation. If we want to have a dignified future as a society, we need to bring a halt to that.

Towards Our Next Society

On our road towards Our Next Society we need to:

1) Refresh our tax systems
This includes an adjustment of what activities are OK for trust offices and brand sub-licensing and will require new international treaties.

2) Further define “Corporate Engagement & Support”
In this case transparency is key, but there’s more we can do. I’ve written a few suggestions here and wholeheartedly invite you to work with me on further developing what Our Next Society will look like, and how to get there.

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Sources and additional information (sorted by date):

  • FD (in Dutch) Britse belastingparadijzen ondertekenen akkoord 13.06.16
  • Sustainable Brands Coca-Cola’s PlantBottle Rollout Signals Brands Taking Sustainability in China Seriously 13.6.13
  • Global Witness Corruption hunters call on the G8 to tackle shell companies and money laundering 13.06.10
  • NY Times Obama Urged to Back Plan to List Owners of Shell Firms 13.06.09
  • NY Times Who will crack the code 13.05.25
  • Tegenlicht (in Dutch) documentary “Tax Free Tour” 13.03.25
  • Ellen McArthur Foundation Ford Motor Company River Rouge production plant (Michigan, USA) 10.08.20
  • De Nederlandsche Bank (in Dutch) Register Trustkantoren
  • List of MBDC clients (tip: check FedEx vs. Alcoa in the infographic)

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Notes:

1) You can read here in more detail, why I prefer to use the term “Corporate Engagement and Support” over a term like ‘Corporate Social Responsibility’ (in short: to encourage an active, positive and innovative contribution of corporate citizenship).