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20 Nov 2015

Principles for Responsible Investment

Principles for Responsible Investment issues guidance to assist investors to promote corporate tax responsibility

"Engagement Guidance on Corporate tax responsibility", 19 Nov 2015

This guidance is primarily intended to assist investors to conduct company engagement, thus promoting corporate tax responsibility: a more responsible corporate approach to tax practices, including better disclosure and transparency, good governance and appropriate management of tax-related risks. This will allow investors to support companies in achieving the right balance between controlling the tax bill and mitigating related risk…[T]here is an increasing expectation from investors and beneficiaries that companies find a balance between controlling their tax bill and paying a “fair” share…A PRI survey of pension holders found that in some countries more than 75% beneficiaries thought it very/fairly important that companies their pension is invested in do not exploit tax loopholes…The UN’s Sustainable Development Goals (SDGs) include countries improving their capacity for collecting tax and other revenue as one of the ways to finance the goals…In the long term, well-run companies should pay an appropriate level of tax, adhere to the spirit as well as the letter of tax laws, and avoid the reputational, legal and financial risks posed by aggressive tax planning. Responsible investors and well-run companies will acknowledge that tax is not simply a cost to be minimised, but a vital investment in the local infrastructure, employee-base and communities in which they operate…[More tax resources from PRI here]