PERTH-BASED ENERGY COMPANY SSE has become the first business in the FTSE 100 to adopt the Fair Tax Mark.
The mark shows that a company is “making a genuine effort to be open and transparent about its tax affairs and pays the right amount of corporation tax at the right time and in the right place”, the team behind it claim.
Initially the mark was trialled from February after Midcounties Co-operative, Unity Trust Bank and The Phone Co-op have become the first businesses to bear the standard, which was developed by a team of tax justice campaigners and tax experts.
Part of the steps SSE took in order to be awarded the mark included publishing a group tax policy that says it will not use tax avoidance schemes or use tax havens to reduce its tax liabilities, while it has redesigned its tax disclosure so that it now provides a full reconciliation of both its current and deferred tax liabilities as well as its overall tax rate.
Additionally, the business has published its first country-by-country report in line with the OECD template outlined in the recent report on base erosion and profit shifting. As part of the changes, SSE has enhanced the narrative notes in its tax reporting to assist understanding of the tax that it pays.
Tax Research UK and Fair Tax Mark founder Richard Murphy said in a blog that “SSE did not get the mark without some effort”.
“What the Fair Tax Mark expects from companies is reporting on tax issues that goes way beyond current stock exchange, company law and regulatory requirements. This is not token gesture stuff either.
“For example, law requires that a company explain its overall corporation tax rate but as all journalists and other users of accounts know, a multitude of sins can be hidden behind that figure. What SSE is now explaining is its current tax rate, and then separately its deferred tax rate. That’s important, because it’s the current tax rate that reflects what will be paid to government and so is the figure most people are interested in.”
Labour MP and chairwoman of the Public Accounts Committee Margaret Hodge said: “SSE clearly feels it has nothing to fear – and potentially a lot to gain – from responding to public demands for greater openness. There is no excuse for other companies not to do the same, and make this new standard in transparency the norm, not the exception.”