Autonomy of tax policy, including the setting of tax rates and tax base, is an intrinsic element of national sovereignty. Nevertheless, in this era of international trade and free movement, supply chain, labour and environmental challenges do not stop at national borders.

Therefore, governments need to find a delicate balance between national and international interests. The most effective path to ensuring a fair and sustainable tax environment globally is for governments to place tax cooperation ahead of competition. In doing so, the needs and rights of all parties to such cooperation mechanisms must be respected.

It is difficult to balance the rights of sovereign nations to set their own tax rates and policies with the danger that low-tax regimes will provoke retaliatory action and trade wars. ACCA supports the principle that nations should be free to determine their own tax affairs, but this should be within the framework of internationally agreed rules to ensure that profits are taxed where value is generated.

Tax is a key factor in ensuring the overall attractiveness of a jurisdiction to businesses, workers and investment. Sophisticated taxpayers and investors recognise the importance of considering the underlying tax base of a country and not just its rates of tax.

For instance, the headline corporate tax rate may be reduced, but the overall tax expense to a business could still increase if business tax deductions are abolished at the same time. It is the quality of the underlying tax system – rather than a simple focus on comparative tax rates – that is of interest to businesses.