The so-called Paradise Papers have put tax firmly back on the global media and political agenda. Over the last three days, we’ve seen a succession of stories highlighting how individuals and corporations have been able to take advantage of different tax jurisdictions around the world. Journalists and politicians alike are again calling for co-ordinated global action to stop this sort of behaviour which, they argue, undermines governments and public finances.
We live an increasingly complex world where trade and capital flows freely. It is clear that domestic and international rules on tax have got out of line with current ways of doing business. The G20 and the OECD have done an enormous amount in recent years to increase transparency and reconfigure domestic and international tax rules. But there is clearly more to be done, especially with the need of national governments to update their laws.
We have been very clear that we expect our members wherever they are based to uphold the highest ethical and professional standards when it comes to tax advice, in line with our ethical code. Our Professional Conduct in Relation to Tax (PCRT) sets this out in more detail. Other professions need to be challenged to abide by similar guidance.
But the furore over the Paradise Papers has highlighted another issue and it is one of trust. Some would argue that only complete transparency of corporate and trust ownership will provide the necessary sunlight for the secrecy that allows such behaviour. Others would suggest that if there are strong agreements in place between governments to share information between their respective tax authorities, then that is sufficient. I have no doubt that this debate will continue to rage over the coming weeks.
Whatever your view, there is one thing I think we all agree on - that individuals and companies who take advantage of any country’s public services have a responsibility to pay tax in those countries that fund those services.
Michael, the ICAEW has history of not commenting or acting pro actively in situations I would expect it to. The last time was following the financial crash when Occupy camped out on the steps of St Pauls. It was clear to me then that although I believe capitalism is the only tenable system, its excesses need regulating by governments - state intervention is necessary to ensure that it achieves what society wants. At that point in time it was clear that the system had excesses that should have been attended to for the benefit of our society. I watched amazed that neither the C of E did anything (by keeping the doors of St Pauls closed - what a lost opportunity to quell their ranks if ever there was one) nor did the ICAEW do anything. No suggestions, planned strategies, etc to heal the obvious maladies of our economic system. Just nothing. And again, now we have this expose regarding tax avoidance/evasion/abuse. It is obscene that Apple has an effective tax rate of 3.7% when people in this country on PAYE are paying at rates up to 50% plus NI. It is also insulting to these same people that so called self employed and other people can send their earnings offshore to where they suffer no tax and the money is then lent back to them as non taxable loans. Now is the time for the ICAEW to redeem itself and start helping solve these problems on the way to a tax system that is fair to everyone. As Warren Buffet once said, it is just not fair that his secretary pays a greater percentage rate of tax than him. This is the chance for ICAEW to be pro active, to contribute to the debate, to take part. Perhaps assist government in developing new laws that seek to be fair to all taxpayers and above all to try and recoup some of the 100's of billions of £'s in evaded, aggressively avoided, etc, tax. Michael, the country is waiting.