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Greater openness on taxation

– Corporate tax contributions have hit the headlines over the past year. However, until now, the public debate has been limited to corporation tax, which companies pay on their profits and which in actual fact makes up just a small proportion of all tax payable by commercial enterprises.

In spring 2013, we requested all companies subject to state ownership steering to submit a report on their tax liabilities broken down by tax category and country. The aim of this exercise was to find out how the companies under our steerage would communicate their tax affairs. At the time, few companies volunteered information beyond the statutory requirement laid down in Finnish accounting legislation. A significant shift is now underway, however. Itella began reporting its tax footprint in the summer and I am confident that other companies subject to state ownership steering are planning to expand on the information they provide. I consider this to be an extremely positive development.

From our point of view, it is important that companies are as open and transparent as possible in their communications about tax. Full disclosure of their tax footprint is always an advantage for commercial enterprises as it is an opportunity for them to demonstrate their corporate social responsibility and because the information is of interest to all stakeholder groups. The EU policies on corporate social responsibility and the new G4 guidance from the Global Reporting Initiative require a more extensive and detailed approach to tax disclosures.

Marja Pokela
Senior Financial Specialist, Government Ownership Steering Department