Business should comply fully with all applicable tax laws and regulations, the guidelines state, utilising tax incentives that are “transparent, published and/or endorsed” by the host nation and refrain from claiming exemptions not granted according to statutory, regulatory or administrative frameworks.
Moreover, recognising that tax cooperation is a two-way street, the guidelines include principles for tax authorities that multinationals believe would smooth interactions, such as clarity of legislation, transparency of enquiries and effective dispute resolution processes. In order for business to behave responsibly, there needs to be clear rules and conditions applied by both parties.
“The relationship between taxpayers and tax authorities is one that should be characterized by openness and trust,” said Christian Kaeser, Global Head of Tax at Siemens and Chairman of the ICC Commission on Taxation. “The ICC guidelines embody the reciprocal relationship of trust and co-operation between businesses and tax authorities for the mutual benefit of both.”
In a global climate where trust in institutions is fading, it is important that business promotes an understanding of its strategic decisions to the general public. According to a 2017 Edelman study, 66% of the general population consider that a company paying its “fair share of taxes” is important for building trust.
Responding to this increasing public demand for multinationals to disclose their tax policies, the ICC document provides a series of guidelines for transparency and reporting principles, for instance having companies release a statement describing measures they have adopted to ensure their management of tax risks and improve their transparency towards shareholders.
The ICC guidelines highlight the fact that international businesses wishing to implement progressive tax principles need the cooperation of fiscal authorities in establishing an environment that is conducive to the effective application of these principles. Beyond transparency and reporting, the guidelines cover principles for tax planning, legislation, pre-clearance systems and dispute resolution—all of which aim to pave the way towards a conducive fiscal environment.
By providing principles guiding the behaviour of multinational companies as well as the principles that need to be followed by the tax authorities, ICC seeks to enhance co-operation, trust and confidence between tax authorities, business taxpayers and the public concerning the operation of the global tax system.
The ICC Commission on Taxation comprises more than 150 taxation experts from companies and business associations in approximately 40 countries from different regions of the world and across all economic sectors. Its mandate is to promote transparent and non-discriminatory treatment of foreign investment and earnings that eliminates tax obstacles to cross-border trade and investment. The commission analyses developments in international fiscal policy and legislation and puts forward business views on government and intergovernmental projects affecting taxation.