Purpose – The purpose of this paper is to develop arguments for a public policy of requiring all large companies to make their tax returns publicly available. It is argued that such a policy would help to check tax avoidance, strengthen public accountability and secure fair competition. Design/methodology/approach – The policy proposal rests on notions of transparency and public accountability. Findings – The paper argues that the proposed policy is feasible. Research limitations/implications – The paper hopes to stimulate debates about the value of public filing of corporate returns and limits of public accountability. Social implications – The paper extends the range of public policies which might be able to check organised tax avoidance. Originality/value – It is one of the few papers to call for public filings of large company tax returns.

Introduction

Tax avoidance is a matter of public concern as it disables the capacity of democratically elected governments to meet policies mandated through the ballot-box, including the mandate to invest in social infrastructure and redistribute income and wealth to secure social stability. Due to secrecy and opacity, the amount of tax avoided/evaded is hard to know. In all, 28 member states of the European Union (EU) are estimated to be losing around one trillion euros each year (Euronews, 2013). It is estimated that between $7.6 and $32 trillion of the world’s wealth is hidden away in low/no tax jurisdictions and escapes tax altogether (Henry, 2012; Zucman, 2015). Various models estimate that global revenue losses due to tax avoidance by corporations could be up to $600 billion each year with approximately $400 billion in developed countries (these are mostly members of the Organisation for Economic Co-operation and Development) and $200 billion elsewhere (Cobham and Janský, ۲۰۱۷; Crivelli et al., 2015; International Monetary Fund, 2015). Revelations such as the Panama Papers (https://panamapapers.icij.org/), Luxembourg leaks (LuxLeaks (www.icij.org/project/luxembourg-leaks)), HSBC leaks (https://projects.icij.org/ swiss-leaks/) and the Paradise Papers (www.icij.org/investigations/paradise-papers/) show that corporations are at the forefront of global tax avoidance. A common practice is to use complex structures, intragroup and related party transactions to shift profits to low/no tax jurisdictions and reduce corporate tax liabilities. Corporations are aided by a highly organised tax avoidance industry dominated by major accountancy firms. Some of their personnel have been fined and imprisoned for enabling their clients to evade taxes (Mitchell and Sikka, 2011). In 2005, an internal study by Her Majesty’s Revenue and Customs (HMRC), UK’s tax authority, concluded (The Guardian, 2009) that 50 per cent of the Big Four’s tax fees came from “commercial tax planning” and “artificial avoidance schemes”, which generated fees of around £۱ billion a year. In 2013, the tax avoidance business of the big accountancy firms became the subject of a hearing by the UK House of Commons Committee of Public Accounts. Just before the hearing the Committee received evidence from a former senior PricewaterhouseCoopers employee stating that the firm’s policy was that it would sell a tax avoidance scheme which had only a 25 per cent chance of withstanding a legal challenge, or as the Committee chairperson put it “you are offering schemes to your clients – knowingly marketing these schemes – where you have judged there is a 75% risk of it then being deemed unlawful” (UK House of Commons Committee of Public Accounts, 2013a b, Ev4). Partners of Deloitte, KPMG and Ernst & Young admitted to “selling schemes that they consider only have a 50% chance of being upheld in court” (p. 5).