The Association of Chartered Certified Accountants (ACCA) has updated its tax report to better reflect changes to the global economy over the last five years.

In the report, the ACCA highlights that in a globalised business environment is it is potentially counterproductive for any one country to change its tax laws unilaterally.

Global policy on taxation of companies: principles and practices was originally published in 2014 with the aim of offering broad views about the issues being discussed around global taxation and of bringing structure and consistency to the debate.

The updated report covers company taxation and looks ahead to how the tax landscape might unfold in the future.

ACCA’s policy lead, tax and business law, Jason Piper said: “Our updated paper revisits the context within which the policy sits, as the global economy has moved on, but reiterates our policy positions, which we believe have stood the test of time.

“As we approach 2020, we believe that coordinated 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.”

The ACCA offers recommendations for companies, policy makers and tax advisers which include:

  • For the company or corporate decision maker: The ACCA believes companies should not in principle pursue aggressive tax avoidance and that companies 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 policy maker: The ACCA has suggested that a different approach may be required for the taxation of companies which could include 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: The ACCA believes that the International Ethics Standards Board for Accountants should review its standards to consider ethical issues around tax avoidance and, if necessary, clarify its guidance and standards. The ACCA believes bodies such as IFAC and other representative bodies should continue to engage in the public debate and acknowledge the role of the professions in responsible behaviours and practices.

Piper added: “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.”