This is a question that most taxpayers would find a little bit annoying because tax is viewed as a necessary evil but which must be complied with since it is one certainty in life. There have been a number of public views on tax over the years demonstrating the disdain with which tax collectors are held.
After the success of Apollo II, in July 1969, a taxpayer suggested that “tax collectors should head the list of those who could be sent to the moon to make this earth much happier place”.
More interesting is a Pharisees’ prayer quoted in the bible in Luke 18:11 where he made this prayer “ God I thank you I am not like other men – extortionist, unjust, immoral or even like this tax collector”. These examples demonstrate people’s perception on tax. The same perception seems to persist even today. In fact, most people and businesses would not pay tax if it was voluntary!
Fortunately, for revenue authorities, the trend is changing globally and businesses are realizing how important it is to pay taxes. Many organizations including individuals now view tax payment as part of being socially responsible. Although a widely accepted definition of corporate responsibility (CR) has yet to be discovered, it is generally agreed that CR is about doing business responsibly, acting with integrity towards all stakeholders involved directly with business (including customers, employers, suppliers and business partners). It involves acknowledging and responding to the needs and concerns of others whose interests are affected by the company’s operations.
Most organizations have given a great deal of thought to their CR and majority tend to focus in the area of environmental management and assistance to the less privileged members of the society. However, paying taxes is now considered an important aspect of a company’s economic impact and contribution to society, as taxes fund social investment.
Taxes should not be viewed by companies merely as a cost or an obligation but as a contribution to the society – in essence, a fee paid to society (Government) for the right to operate within it. Tax payment is a responsibility that should embrace principles such as accountability, transparency and full disclosure and ethical dealing with the revenue authority.
A call to CR in relation to tax simply means paying the right amount of tax. It does not demand that businesses pay more than they are required. CR means that businesses will not engage in tax evasion. Tax evasion is illegal and involves concealment and misreporting.
At global level, companies now provide more disclosure or information about their total tax contribution to Governments. Multinational companies such as Unilever Plc, Vodafone, Anglo American plc and many others have made comprehensive disclosure of taxes paid as part of their financial reporting.
It is a means of communicating to all stakeholders that the company is operating responsibly in respect to tax obligation. Going forward, communication around tax will become an area of increasing focus.
A commitment to paying taxes to the Government is corporate social responsibility for both citizens and businesses. The outcome will assist Rwanda to become more self reliant!
Nelson Ogara is a Senior Tax Manager at PwC Rwanda