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When is corporate tax a problem for corporate reputation?

Amazon and eBay executives were accused last month by MPs of allowing certain overseas suppliers (Amazon and/or eBay customers) to sell their products in the UK without paying VAT.

The alleged direct impact being a £1.5bn hole in HM Treasury’s purse; the indirect impact being a number of small, legitimate, UK-based companies going out of business. Clearly neither outcome is in the UK’s interests and MPs rightly wanted answers.

The internet companies’ response was what you might expect; they don’t want these companies selling on their sites and Amazon is focused on “all sellers competing equally”.

Both companies also pointed out it is the responsibility of the seller to determine and declare the appropriate VAT. But if Amazon and eBay are in turn profiting from the fees paid to them by VAT-evading suppliers the line of responsibility becomes a little less clear cut.

Regardless of the rights and wrongs or debate over who is responsible, such topics serve up two undesirable consequences likely to damage the reputations of those involved. Amazon and eBay seem to be, at best, ignoring individuals breaking the law.

Secondly, for Amazon in particular, it is the latest in a number of recent stories about the company’s tax affairs which is unlikely to sit well with the public and provides those who wish to criticise the company with the perfect ammunition to do so.

Figure 1: company reputations among the UK public, mapped by Reputation Credit Score and Intensity Score (each dot represents a different company)

In late 2016, when Populus last measured Amazon’s Reputation Credit Score (Populus’s established method for measuring and comparing topline corporate reputations), it scored a healthy 673 (out of 1,000) – not far off scores seen by M&S and John Lewis. eBay was 21st with a score of 625.

Both also benefited from relatively high Intensity Scores (Populus’s measure of how strongly people feel towards a company), which suggests both are perceived reasonably well.

Even if, on the surface, the companies seem to be doing okay, the question is what could they be doing better to improve their reputation?

What is holding them back, how could an improved reputation generate better business performance?

In Amazon’s case the picture is very clear. Of the five key attributes tested – favourability, trust, respect, responsible and proud to associate – Amazon ranked very highly in four (comparable with M&S and John Lewis).

The outlier? Responsibility, where it was rated much lower (comparable with car companies and well below companies like Waitrose, John Lewis and Sainsbury’s). Still not a terrible performance but markedly different to the others.

Without digging deeper it’s difficult to say if this is directly linked to Amazon’s corporation tax affairs, however, something is holding them back and the prospect of further coverage questioning how responsibly it is behaving with regard to UK taxes and small businesses is unlikely to help. If this in turn is in the minds of consumers when shopping – does this prevent them from giving their money to Amazon?

Of course, it may be the case that such reluctant consumers are in the minority and Amazon may have decided that the revenue boost from winning them over is not worth the expenditure of policing non-compliant suppliers (or paying more corporate tax).

However, in a world of constant shareholder and stakeholder demand for growth there is always a tipping point and it is this kind of marginal gain which could provide the key to how those demands are met.

Populus’s reputation measurement approach, developed over 13 years, is a proven series of tools, techniques and analysis which allows reputation to be understood, influenced and improved. Find out more about Populus’s Reputation Measurement approach by calling +44 [0]20 7253 9900 or emailing info@populus.co.uk

 


Ben Loyd

Ben is a corporate reputation expert focused on managing client planning and strategy at a senior level, developing and nurturing client relationships, and helping clients identify how reputation can inform and advise business decisions.

Prior to joining Populus as Director of Corporate Reputation, Ben led a team of 25 on global reputation and research as Head of Millward Brown’s Corporate Practice. He has a wealth of experience in leading reputation teams and tackling client reputation challenges.


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