On 9th January 2013, Sainsbury’s Chief Executive Justin King slammed the tax affairs of multinational corporations. Criticising the way that companies can choose where to pay tax by shifting their profits across borders, King used his own supermarket chain as a contrast:
“We are entirely domestic, we pay our tax in the UK”, he said. (Watch the interview here).
A quick look at Sainsbury’s annual accounts appears to confirm his statement. The company’s Britishness is celebrated and nowhere is there any mention of an overseas presence. Yet the supermarket chain’s filings to Companies House tell a different story. Sainsbury’s has subsidiary companies in the USA, China, the Cayman Islands, Jersey, Guernsey, Hong Kong and the Isle of Man. It seems that Sainsbury’s may well be a multinational corporation after all.
That then begs the question, what is it doing in all of those places and how does this affect the company’s finances? Might this information explain the £458m gap between what Sainsbury’s said it would pay in tax between 2007 and 2012 and what it actually paid as calculated by the Fair Tax Mark?
The Fair Tax Mark believes that in order for investors, customers and the public to truly hold a company to account, we need to know about the business they conduct on a country-by-country basis. This is not a matter of disclosing commercial secrets, just of providing information on such things as turnover, profit and tax paid in each place so that we can see the kind of transactions they are engaging in. For fuller outline of CbC see here.
Luckily, Sainsbury’s CEO seems to agree on the need for greater corporate transparency. During his January interview he said:
“If companies believe what they do is moral, they should be very happy to lay bare what they are doing, and open it to consumer scrutiny, and we are quite happy to do that, not just on the issue of tax . . . companies should open themselves up and be counted on the things that they stand for. And of course if they really believe what they are doing is in the interests of their consumers, they shouldn’t have any difficulty in answering those questions, should they?” (See video).
Great. Ok then, Mr. King, please tell us what you’re up to in so many secrecy jurisdictions? What is it that you’ve found so necessary to hide from us your customers, shareholders and suppliers? The truth should cost less at Sainsbury’s.