22 June 2017

ACCA: More transparency over aggressive tax planning arrangements and beneficial ownership

ACCA welcomed the EC’s proposal to amend the existing legislation on mandatory exchange of information in the field of taxation in relation to reportable cross border arrangements. ACCA warns the Directive will only have its desired effect if the implementation is proportionate and consistent.

ACCA’s position has always been very clear: Ethical behaviour in the tax profession is critical, the work carried out by our members needs to be trusted by society at large as well as by clients and other stakeholders. What our members do reflects not just on themselves but on the profession as a whole*.

Chas Roy-Chowdhury, head of taxation at ACCA says:  'We cannot deny that recent scandals such as Lux leaks and Panama Papers revealed the role played by certain intermediaries in facilitating offshore tax evasion through aggressive tax planning arrangements. The overarching aims of the Directive, which are to close certain existing loopholes and increase transparency and access to the right information at an early stage, are welcome. We agree that information which currently escapes from the scope of the existing legislation has to be captured in a way or another.

'Placing a reporting obligation upon intermediaries – and, in the absence of intermediaries, on tax payers- on potentially aggressive tax planning arrangements to tax authorities could be a workable solution. Having access to information about these arrangements before they are implemented could indeed allow the relevant authorities to curb them and protect their tax revenues.'

ACCA warns that while the sharing of information about aggressive tax planning arrangements is positive, it is nevertheless very important to make sure that the EC and Member States’ tax administrations will be able to use the information effectively.

Chas Roy-Chowdhury explains: 'The fear of inadvertent non-compliance and the penalties that will result may drive some tax professionals to over-disclose, just to be on the safe side. The volume of disclosures could mean that smaller, less well-resourced tax administrations will not benefit fully from the Directive. ACCA suggested in its response to the consultation on tax intermediaries that some form of a "summary"mechanism flagging key operative elements of each scheme, or a method for classification, would allow the tax administrations to more easily filter information.'

Given the complexity of our globalised world, ACCA agrees that trying to define the concept of aggressive tax planning is unlikely to be a successful exercise.  Theoretically, we would see the inclusion of so-called specific hallmarks as a positive step, but we are calling for a balanced approach, namely regarding their interpretation and scope.

Full press release

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