The missing element: Moral culture

A company’s moral culture is key to its moral performance and is a prerequisite for the creation of sustainable value over the long term. The management board is responsible for creating a healthy moral culture. Communication about the ways this culture is promoted and reinforced enables stakeholders to hold the board to account. Companies already communicate their values, but stakeholders want to know how these values are translated into practice. How do they inform a company's tax strategy and its (major) concrete decisions? What kinds of problems are perceived as tax dilemmas from a moral point of view, that is, from the set of moral values endorsed by the company? Transparency’s educational function allows stakeholders to gain more insight into a company's moral tax culture and may provide companies with valuable feedback. More information is needed about organisational values and the ensuing practices to enable stakeholders to assess companies’ tax behaviour. Governance codes could pay more attention to this issue to help companies to transpire ethical tax behaviour as part of their governance.

VBDO’s Tax Transparency Benchmark regards corporate tax governance. The benchmark could perhaps also take ethical tax behaviour on board. A new principle could then be fleshed out with several criteria that refer to the main aspects of management and control, responsibility and influence, and supervision and accountability of tax behaviour from a moral point of view. They would formulate what a healthy organisational moral culture and good practice would look like; how are the company’s moral values applied in tax practice? These criteria would be like the tone at the top, supporting and stimulating moral learning and development, encouraging criticism and voicing rival points of view, identifying and discussing moral dilemmas and possible blind spots, and accounting for stakeholder perspectives on ethical tax behaviour.