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Setting an Ethics Quality Bar for Professional Judgment in Relation to Tax Planning

CFE Tax Advisors Europe: Discussion Paper “Professional Judgment in Tax Planning – An Ethics Quality Bar for All Tax Advisers”

“If it is legal, is it acceptable?” is the central ethical question which inspired this discussion paper. It is distinct from criminal tax evasion – breaking the law.

The question comes down to whether there is manipulation and artificiality in tax planning, for example, where planning arrangements are designed without any genuine underlying economic purpose other than achieving the tax saving. Some commentators refer to this problem as “aggressive tax avoidance”, but we are mindful of the endless debates over terminology, not least due to the problems of translation.

Five Key Questions for Tax Advisers to Reflect on When Preparing and Providing Advice:

  1. Is there a genuine economic purpose for the tax planning apart from achieving a tax benefit, either now or in the future?
  2. Are the arrangements artificial or manipulated in a form-over-substance approach to achieve a tax benefit?
  3. Is the tax planning based on interpretations of applicable international and national tax law which are likely to be considered credible by the courts and informed stakeholders?
  4. Would the arrangement be implemented if the relevant tax authority had a full overview of every aspect of the planning?
  5. Are there any other potential reasons why the tax planning could be perceived by policymakers and the general public as abusive?

You can read the full article here.

Should Tax Planners be subject to a special code of conduct that prohibit aggressive tax avoidance schemes? Click here to vote.

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