IESBA sets ethics standards for corporate tax planning

The International Ethics Standards Board for Accountants has unveiled a set of ethical standards for business tax planning in response to complaints over tax avoidance by multinational companies.

The standards on ethical considerations in tax planning and related services establish a framework of expected behaviors and ethics for accountants. They come after revelations in recent years of tax strategies uncovered through leaks of confidential documents known as the Panama Papers and the Pandora Papers from international accounting and law firms. A trial of 27 employees from one such law firm, Mossack Fonseca, began last week in Panama. The standards, certified by the Public Interest Oversight Board, have been incorporated within the IESBA Code of Ethics. 

Instead of taking a purely mechanical and legalistic approach, the standards aim to provide a principles-based framework and a global ethical benchmark for tax planning services and activities. They arrive as the Organization for Economic Cooperation and Development has also been working to crack down on corporate tax avoidance strategies through its base erosion and profit shifting initiatives.

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"Professional accountants have an important duty to their clients but must not lose sight of their fundamental duty to the public interest," said IESBA chair Gabriela Figueiredo Dias in a statement. "As scandals in recent years have shown, though some behaviors may be legal under the letter of the law in certain jurisdictions, the 'gray area' of tax is not always the ethical way forward. These standards provide a robust framework to help professional accountants, as well as all other tax advisers whom we strongly encourage to adopt or use the standards, navigate the ethical decisions in this complex area that are central to trust in the entire system."

In addition to determining there is a credible basis for the tax-planning arrangement, accountants are expected to exercise professional judgment and consider the reputational, commercial and wider economic consequences that could arise from the way the public might view the arrangement.  

The standards take effect July 1, 2025.