Policy and taxation: Insights and trends in global tax policy

ACCA has updated its global policy on the taxation of companies to accompany its commentary Where next for tax and ethics in the 21st century?

The first Global policy on taxation of companies: principles and practices report was originally published in 2014 to offer broad views about issues being discussed at the time around global taxation, with the aim of bringing structure and consistency to the debate. The principles and practices of taxation of companies were further explored in a reboot to the 2014 guidance published in 2019.

An updated version, issued in September 2024, sets out the context and notes how perceptions of the role of business in society have shifted, as have the priorities of governments and taxpayers around the world.

As well as putting corporate taxation within a moral, societal and economic setting (with issues further explored in the accompanying Where next for tax and ethics in the 21^st century?), the report also sets out ACCA’s regulatory position, which notes how the area of tax advice does not present any unique issues of ethical conduct for the professional accountant.

ACCA working to improve tax systems

Covering company taxation, rather than personal tax, this report reviews how the tax landscape might unfold in the future. It also identifies features of a ‘good’ tax system and frames principles that ACCA aims to follow in its approach to policy on corporate tax matters.

Our updated paper revisits the context within which the policy sits, as the global economy has moved on, but reiterates ACCA's policy positions, which we believe have stood the test of time and align with the recently released International Ethics Standards Board for Accountants’ (IESBA) Ethical Standards for Tax Advisers.

Coordinated and continuing 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. ACCA supports and is directly involved in the efforts being made at G20/OECD level to achieve this global reform.

Some recommendations for companies, policymakers and those working as tax advisers, include:

For the company or corporate decision maker

Corporate decision makers and companies should not, in principle, pursue aggressive tax avoidance — which means that they should not partake in completely artificial arrangements that have no clear purpose other than to avoid tax by complicated schemes.

Companies have a commercial imperative, but ACCA believes that they also have a wider responsibility to be good corporate citizens. They need to consider the wider impacts of their tax policies and recognise that some approaches to tax will be seen by some people as unethical even if they are legal.

For the professional accountant – as adviser or employee

Professional accountants have a duty to advise their clients and employers on all options for maximising profits and prospects – this duty invariably recognises that taxpayers have no obligation to pay tax beyond the requirements of the law.

Accountants also have a clear duty to advise on the risks and the ethical dimension, including technical and reputational issues, associated with all available options. Not doing so could lead to the possibility of committing professional misconduct.

For the policy maker

Tax laws in many jurisdictions were constructed for a different era of business. ACCA calls for clearer and simpler tax laws reducing uncertainty.

Taxpayers’ rights must be recognised and a balance of interests preserved. In light of this, ACCA suggests that a different approach may be required for the taxation of companies, including considering whether corporate tax itself is workable at all in the new global environment and, therefore, whether other forms of taxation of corporates need to be developed.

For the profession 

Bodies like IESBA should continuously review and update their ethical standards while working with professional accountancy organisations (PAOs) to ensure that all advisers are aware of the IESBA ethical guidance.

PAO should continue to engage in the debate on responsible tax practices, acknowledging the profession’s role in promoting ethical behaviour.

Conclusion

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.

The accountancy profession is and should be part of the solution. 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.