The challenges of transparency
As Ross Lyons, Rio Tinto’s head of Tax, emphasises, this recent shift towards greater transparency is a positive development.
“It’s one of the solutions that will ensure multinationals are more compliant,” he said. “This levels the playing field and increases revenues in countries, giving them the flexibility to reduce business tax rates and increase incentives for investment.”
And for companies like Rio Tinto, Ross sees transparency as an opportunity.
“At a time when there are questions over trust in multinationals, it’s a chance to build trust by demonstrating that they are paying their fair share of tax and providing revenue to the countries in which they operate.”
In short, transparency is good for business. But as Ross also points out, the many tax regimes emerging around the world are also creating challenges.
“There are different rules between, for example, Australia, the UK, Canada, plus the EU’s regime and Dodd-Frank in the US. Materiality levels vary widely, in some cases right down to disclosing every single dollar. This lack of uniformity can increase the cost of compliance for companies.”
The EITI’s Jonas Moberg also points out that it’s not enough for corporations alone to be more transparent.
“While companies have made great progress, there’s a long way to go. We also need practical, meaningful transparency in the countries where they operate. Our in-country teams are working with local and national governments, and NGOs to move this forward,” he said.