Corporate tax risk: poking the bear

Corporate tax is increasingly in the news, but are investors guilty of complacency over the risks it poses?

If you poke a bear with a stick too many times, eventually it will turn and bite you. In a world of rising government debt and social inequality, in which institutional investors are increasingly struggling to find sustainable returns, that bear is the tax man. And, as the mood begins to change, corporate tax risk is on the increase.

Companies including Apple, Facebook, Starbucks, Amazon and Vodafone have all come into the firing line in one way or another over their tax policies in recent years and the sums in question are not negligible. In August the EU ordered Apple to pay €13bn to the Irish authorities after it found the company was the beneficiary of illegal state aid.
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Yet, despite the eye-watering sums and the scale of brands facing questions over their tax policies, Richard Murphy, director of Tax Research UK warns of a “deep complacency” about the dangers rising corporate tax risk could pose to institutional investors. READ MORE

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