New ACCA policy report places focus on corporate transparency

New ACCA policy report places focus on corporate transparency

The ACCA's new guidelines for company taxation range from ethical considerations to revised policies on tax evasion, with new considerations for tax advisory professionals.

New ACCA policy report places focus on corporate transparency

The Association of Chartered Certified Accountants (ACCA) has updated its global policy on the taxation of companies for the first time in five years, citing changes in the global economy and business environment.

The report, ‘Global policy on taxation of companies: principles and practices’, establishes an updated set of standards for ACCA-certified accountants to follow, with a focus on tax advisory.

Jason Piper, policy lead for tax and business law at ACCA, said: “As we approach 2020, we believe that coordinated efforts should be made internationally to ensure that tax systems keep pace with changes in the way that business is conducted, capturing the substance of economic activity in the calculation of liability to tax.”

Transparency and ethical corporate values

While the ACCA is supporting the global reform efforts being made at the G20/OECD level, the report recommends that companies, policymakers and tax advisers avoid aggressive tax avoidance.

Instead, the body supports tax transparency, as it shows the social responsibility of corporations—particularly because an action which is legal may still be unethical, which the ACCA feels the company should be open about.

The report also notes that while wider tax and contribution disclosures may be difficult to implement, they still necessary for companies to be ‘good corporate citizens.’ This means that companies should consider the overall impact that their tax policies have on the global economy.

Rather than avoiding tax, the ACCA recommends that companies consider the ramifications of their tax avoidance schemes—even if legal—on an ethical basis.

“While debates will continue about taxation, the heart of the matter is whether tax laws, especially for corporates, reflect the new business models of the 21st century and consumers’ wider ethical expectations,” Piper said.

Additionally, as the economy becomes more and more digital, global consumption and production patterns will change, creating another challenge.

The ACCA suggests that mechanisms, such as the global minimum tax, may help ensure that international companies pay at least a ‘minimum rate of tax on global profits’—but also considers whether corporate tax itself can survive in the new global environment. Thus, new forms of taxation should be considered and tested as tax laws change.

Changing duties of professional accountants

To avoid any allegations of professional misconduct, the ACCA has doubled down on the idea that accountants have a ‘clear duty’ to fully advise clients. This includes advising on both financial and ethical risk, including both technical issues and reputation.

Additionally, accountants should advise both their clients and employers on all applicable tax options.

The ethical behaviour of accountants is under scrutiny by the ACCA, who is now pushing for the International Ethics Standards Board for Accountants (IESBA) to review its own standards regarding ethical issues around tax avoidance.

While these ethical standards are not unique, nor new, they bear repeating, particularly as the ACCA’s guidance places renewed importance on explaining the white, black and grey areas of tax advice.

Alongside these revisions, the report encourages accountancy bodies to continue the public debate over these issues and the role accountants play in keeping the practice accountable.

“The accountancy profession is and should be part of the solution,” Piper said. “Professional accountants need to continue their work with policymakers to develop approaches that work for business and allow companies to be competitive and profitable, while also meeting wider considerations of social responsibility.”

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