Anton Colella: Hold the feet to the fire on international tax
The big issue of international tax won’t go away. It’s threatening to harm the reputation of the profession in the eyes of the public and cause damage to trust in business.
Recent developments in creating a more transparent and fair regime for global tax are crucial.
The OECD has finalised its package of measures to limit base erosion and profit shifting (BEPS) by multinational companies.
BEPS activity by multinationals could be costing as much as £150 billion worldwide in lost corporate tax revenue.
The challenge now is we must see action by governments around the world to put the OECD's measures into practice.
The UK Chancellor George Osborne has said that we should hold countries’ “feet to the fire” if they don’t implement the proposals in full.
Included in the package are changes to the internationally agreed transfer pricing guidelines, changes to tax treaties and a raft of changes for governments to put in place at national level.
Businesses want clarity. The BEPS package should help to provide that. But only if it is consistently put into practice by all major economies.
It must be remembered that raising more revenue for governments is not the sole purpose of these reforms. Just as important is restoring public trust in the system, and in business.
Research commissioned by ICAS and SSE earlier this year exposed the credibility gap which currently exists between the public and big business when it comes to trusting companies on their approach to paying tax.
The YouGov study found that only a third of people think most big businesses in the UK pay their fair share of tax and just 6% would trust a company to provide accurate information on whether they are paying the right amount of tax.
One of the key aims of the OECD reforms is greater transparency. Under the proposals, from next year, UK companies will also have to provide “country by country” reports to HMRC with details of revenue, profit and taxes for each tax jurisdiction in which they do business.
These are large steps in the right direction. There must be the will and the wit to ensure greater transparency if we are to truly restore trust in the global tax system.