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Press watch: Tax Transparency: Vodafone

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The Financial Times has reported (15 December) Vodafone as saying that businesses must open up their affairs to more public scrutiny. John Connors, group tax director of Vodafone, said ‘responsible’ businesses had nothing to fear and that ‘ultimately, it will be in the public domain whether by accident or design.’ Vodafone Group PLC’s Tax risk management strategy report, available from its website, focuses on: integrity in compliance and reporting; enhancing shareholder value; business partnering; influencing tax policy; developing its people; and controlling and managing risks. The paper says that ‘we will enter into tax planning where the financial benefit is tax related but we will not engage in artificial tax arrangements. The test of artificiality is generally aligned with the existence of commercial purpose’.

Meanwhile, Thomson Reuters, in association with the Chartered Institute of Management Accountants (CIMA), surveyed the heads of tax of more than 100 global organisations and found that only 35% of respondents already have or are currently planning a tax transparency strategy. The results reveal that despite a belief that tax transparency will add a significant additional administrative burden (52%) on the tax department, just 19% of respondents have budgeted for increased costs.

A survey of in-house tax departments conducted earlier this year by Affecton Consultants, in association with Tax Journal, suggests that reputation matters more to the board than managing the effective tax rate, with an overwhelming majority of respondents thinking that we are now in a ‘new era’ in which companies have to recognise public opinion as a key stakeholder in the company’s tax policies and strategies.