Corporate Tax Abuse
Taxes and royalties are designed to raise resources for government expenditures, including on infrastructure and basic services such as healthcare, education and social security. Responsible revenue sharing practices that are grounded in human rights can help reduce poverty and contribute to the realization basic human rights as well as the Sustainable Development Goals (SDG 17).
In practice, many countries struggle to collect sufficient revenue to fund essential public services. Regressive tax systems coupled with widespread corporate tax abuse and evasion fuel rising inequality and widen disparities in human rights enjoyment. Scandals like the Panama Papers, exposing 214,488 offshore entities in 2015. Revenue sharing agreements and payments of royalties by extractive industries may also contribute increased social and economic inequalities within countries.
PRI’s guidance on corporate tax responsibility notes that to respect human rights throughout their operations, corporate boards, tax advisors and financial institutions should ensure that their tax planning strategies and services do not adversely impact human rights. Investors should therefore call on companies to undertake impact assessments of all of its operations, including in relation to tax planning practices and the financial flows and tax revenues that are generated in different jurisdictions; negotiate fair and transparent revenue sharing agreements with the host countries; and provide greater transparency and access to information to tax authorities and through public reporting.
- A New Bar for Responsible Tax: The B Team Responsible Tax Principles, The B Team, 2018.
- Engagement Guidance on Corporate Tax Responsibility, Principles for Responsible Investment, 2015.
- Natural Resource Revenue Sharing, Natural Resource Governance Institute and UNDP, 2016.
- Publish What You Pay Initiative
- Tax Abuses, Poverty and Human Rights, International Bar Association’s Human Rights Institute Task Force on Illicit Financial Flows, Poverty and Human Rights, 2013.