ABN AMRO embraces the new Tax Governance Code

ABN AMRO is one of around 40 large Dutch multinationals to embrace the new Tax Governance Code presented today by Dutch employers’ organisation VNO-NCW.

The Code has been drafted with help from companies that together represent a large proportion of publicly traded enterprises in the Netherlands, and with input from unions, NGOs, tax experts and academics.

The minimum values were established on the basis of existing initiatives such as The B-Team Responsible Tax Principles and the Global Reporting Initiative. Companies that adopt the new Code agree not to avoid taxes through use of tax havens, and consider taxation to be a tool towards achieving social and economic cohesion, sustainable growth and prosperity.

Besides ABN AMRO, many other listed companies have also adopted the Tax Governance Code, including 20 of the 25 companies listed on the AEX. Several large privately held cooperatives and a few prominent family-owned businesses have embraced the new Code as well, with further companies set to join them soon.

The companies that have now adopted the Code share a belief that taxation is more than simply an expense: above all, it represents a contribution to the society of which the taxpayer is part and on which it depends.

Key points of the Code

1. Adopters should have a clear tax strategy and clear tax principles that they embrace. Their strategy, which applies to every unit of the adopter’s corporate group, should be published for reference by stakeholders.

2. They should have a governance structure in place. The board should play the principal role in that governance structure, which should also provide for compliance audits.

3. Tax compliance: adopters should act in accordance with both the letter and the spirit of tax law, whether domestic or foreign.

4. Corporate structure: adopters should only put structures in place that are driven by commercial considerations and that are appropriate for their business operations (including a realistic presence). Adopters should not use tax havens to avoid taxation: a presence in a tax haven is permitted only if it has real economic significance, for example if the company sells or manufactures products or services there.

5. Interactions with tax authorities (whether domestic or foreign) should be based on mutual respect, transparency, trust and constructive cooperation.

6. Adopters should be as transparent as possible, for example by disclosing what taxes they pay and where, and what tax incentives they use. Companies should also regularly publish details of their tax strategies.

Comply or explain

The Code establishes a clear and transparent system in which accountability and supervision of tax policies are intrinsic elements. Like the more familiar Corporate Governance Code, the new Tax Governance Code is based on the principle of ‘comply or explain’: companies must render account for any principles in the Code where they are not, or not yet, compliant. This opens up possibilities for stakeholders to initiate a dialogue with the company, and offers journalists and anyone else who is interested a much better understanding of the company’s tax position and what it contributes to the societies where it operates.