Last month, the International Ethics Standards Board for Accountants (IESBA) launched what has been described as the first global ethical framework of standards for tax-planning advice.
The new framework, which takes effect 1 July 2025, places a new requirement on professional accountants to consider the reputational, commercial and wider economic consequences of their tax-planning advice.
Restoring trust
The board’s wider ambition is to embed standards of behaviour within tax-planning advice that will help restore public trust in taxation. The goal is also to respond to public concerns about tax-avoidance schemes in the wake of revelations concerning offshore companies and trusts.
Interestingly, the new framework highlights and makes specific mention of the social contract between big businesses and the markets that support them. In announcing the move, Gabriela Figueiredo, IESBA’s chair, said: ‘Professional accountants have an important duty of care to their clients but must not lose sight of their fundamental duty to the public interest.’
The code recognises the critical role that professional judgment plays in the dispensing of tax advice, and sets its sights on accountants within businesses as well as those within accountancy firms. It aims to move away from check-box compliance and towards making principled assessments, raising the bar in terms of ethical behaviour in professional tax advice.
Accountants should consider the wider reputational, commercial and economic consequences
IESBA provides guidance to accountants on areas such as:
- acting in the public interest
- complying with legislation and regulations
- establishing a credible basis for their tax-planning advice.
The code stresses the importance of advising on a tax-planning arrangement only if the accountant has determined that there is a credible basis for proceeding in terms of its legality. In addition, they should apply what IESBA refers to informally as the ‘stand-back’ test, which means considering the wider reputational, commercial and economic consequences that could arise from a piece of tax-planning advice.
Additionally, there is consideration of how accountants should proceed if adherence to the code results in advice that runs contrary to their client’s or employer’s aspirations.
Protective role
As Jason Piper, ACCA’s policy lead for tax and business law, points out, the new framework chimes with ACCA’s global policy on taxation of companies, first published in 2014 and updated in 2019. The document represents ACCA’s ethical stance around corporate tax and avoidance schemes, and explores implications for policymakers and corporate decision-makers.
Piper points out that the IESBA code provides protection for tax accountants. Tax planning for large corporates has always been complex, he argues. An international code of ethics specifically for tax will strengthen an accountant’s case should they need to rebut a client that wants them to act unethically. ‘It’s actually supporting accountants in being able to explain to pushier clients that they’re doing the right thing,’ he says.
Meanwhile, arrangements where multinationals make use of jurisdictional differences continue to draw fire from commentators. Many household names attract attention in the European press for arrangements that result in paying low levels of corporation tax to the relevant countries.
Such commentary is, Piper believes, often counterproductive. ‘There is a vocal minority, in the press and in politics, who pursue the “accountants/professionals as enablers of avoidance” narrative, which is corrosive of public trust,’ he says.
Moreover, as ACCA’s biennial survey Public Trust in Tax consistently finds, the public tends to place more trust in tax accountants than it does politicians. And while respondents are concerned that multinationals pay too little in tax, they are more concerned that low-income taxpayers pay proportionally far too much.
‘We reach beyond what IESBA is able to do in what is specifically a code of conduct for the profession’
In Piper’s view, the conversation could be usefully moved away from ultimately fruitless debate about individual contentious tax-planning arrangements and towards discussion of how the relationship between corporate tax payers and respective tax authorities could be less adversarial – how taxation could be more directly a force for good.
‘This is where we reach beyond what IESBA is able to do in what is specifically a code of conduct for the profession,’ he says. ‘In our policy statement, we also think about: what could policymakers do, what role can the politicians play?’ he says.
Focus on profit
Mature discussion, in his view, could move towards analysis of how companies make their profits, whether those profits are achieved by cutting corners, offshoring labour or situating production centres in less environmentally friendly operations. ‘If you’re only taxing profits, you can’t influence any of that,’ he points out.
Increasingly, governments are looking at ways to tweak the profit tax regime. ‘In the UK for a time, companies could attract enhanced capital allowances if they bought from a specified list of green technologies.’
And there are areas where governments give specific R&D tax credits for research into environmentally beneficial schemes. Taxing consumption and pollution more heavily is one option that has the potential to bring about a more productive state of affairs.
‘You could actually reduce the levels of tax on labour,’ Piper says. ‘That then means people have more money to spend, which means they have a better quality of life.’
So, while the code of conduct moves the needle in terms of providing a framework against which tax accountants can weigh up the rationale of an arrangement, wider discussion of the role of tax will always have a place.
More information
For ethics guidance, visit ACCA’s dedicated section offering advice and covering key topics.
