In a significant move aimed at restoring public trust and enhancing ethical practices in tax planning, the International Ethics Standards Board for Accountants (IESBA) has released a comprehensive suite of global standards. These standards, announced on April 15, 2024, are designed to address the ethical complexities of tax planning and related services, moving beyond a “purely mechanical and legalistic approach.”
The newly-issued standards provide a clear framework for behavior and ethical considerations that accountants and tax professionals should adopt when engaged in tax planning on behalf of clients. The IESBA’s Code of Ethics, of which these standards form a part, is mandatory for professional accountancy organizations within the International Federation of Accountants, including the Association of International Certified Professional Accountants.
Source: https://www.ethicsboard.org/who-we-are/gabriela-figueiredo-dias
Gabriela Figueiredo Dias, the Chair of the IESBA, has emphasized that the standards are not just about ensuring compliance with the law. They also address gray areas where legal arrangements may not align with ethical principles. Accountants are being urged to consider an holistic approach, which includes the reputational, commercial and broader economic impact of their tax planning activities, thereby considering not only the legality, but also the morality of their actions.
The IESBA highlighted that harmful tax planning practices can damage a company’s credibility, lead to litigation and erode public and institutional trust. By providing a robust ethical framework, the Board hopes to mitigate these risks and foster greater accountability amongst tax professionals.
The standards were developed in response to high-profile tax avoidance scandals, such as those revealed by the Pandora Papers and the Paradise Papers. These scandals underscored the need for clearer ethical guidance in the field of tax planning. The IESBA’s standards are intended to guide accountants through the complexities and uncertainties of tax laws and regulations.
Key areas covered by the standards include understanding tax laws, exercising professional judgment, effective client communication, consulting experts, evaluating transparency needs, maintaining proper documentation, and responding to suspected non-compliance. By addressing these aspects, these new standards aim to provide tax planners with better guidance in order to make ethically-sound decisions.
The IESBA’s new standards are set to take effect on July 1, 2025.
Contributor
Guylian-Antoine Bouffioux is an associate at Jones Day,
specialising in corporate law, mergers and acquisitions,
private equity, and equity capital markets.
He is a qualified lawyer admitted to the Brussels Bar
