Tax policy is a part of reputation, says former Rio Tinto head of tax Chris Lenon
In an interview with Salman Shaheen, Chris Lenon, former head of tax at Rio Tinto, who chaired the Tax Committee of the Business and Industry Advisory Committee to the OECD until last year, says that companies must pay attention to their reputation when it comes to tax policy
Lenon says that business needs to examine its tax policies to see how they will be perceived by consumers and the government. – "Tax policy is a part of corporate reputation now," Lenon said.
Common arguments in defence of corporate tax avoidance is that it’s legal and that it doesn’t take into account a company’s total tax contribution to society, but Lenon is not convinced.
"I don’t think the “it’s legal” argument is very strong – after all the law can be changed. The question is: how is it perceived? Does the planning meet the “spirit of the law”?," he said. "Total tax contribution is important, but I think that tax policy is also now important. Contribution alone may not be enough - look at how Starbucks is perceived."
Lenon believes there is an increasing appetite among multinational corporate tax directors to engage in the ethical issues of taxation such as tax justice.
"I don’t think that tax directors have a choice however reluctant or uncomfortable they may feel," Lenon said. "Tax has become a major media story and companies need to be able to explain their tax policy and practice in a way which non tax experts and the public can understand."
Read the full interview on ITRPREMIUM