ICAEW’s Tax Faculty has warned that a widespread belief that some businesses can pay less than their fair share of tax can undermine confidence in the tax system.
ICAEW’s Tax Faculty has warned that a widespread belief that some businesses can pay less than their fair share of tax can undermine confidence in the tax system. An eight-page paper titled Taxing corporate profits: hard choices had not been published on the ICAEW website as Tax Journal went to press, but its author Andrew Gambier posted a link on Twitter on 20 December.
‘Low tax morale damages public finances,’ the paper said, adding that there were ‘good practical reasons’ for taxing company profits. The OECD’s project on base erosion and profit shifting sought to ‘ensure that all business profits are taxed somewhere’.
It stated that it was in everyone’s interest for there to be open, well-informed debate about ‘how to address tensions between the management of economies [including provision of capital allowances and other tax incentives] and perceptions of fairness in taxing corporate profits’.
Greater tax transparency could enhance credibility, the paper suggested, but could only go so far. Deferred tax did not appear to be well understood by commentators or the general public. ‘Because there are so many factors that feed into the tax base, no amount of disclosure can hope to encompass them all and few readers of accounts will be able to absorb all that is disclosed,’ it said.
Richard Murphy, director of Tax Research UK, whose campaign against tax avoidance continues to attract frequent coverage in mainstream media, claimed the paper was ‘an exercise in obfuscation’. Transparency could solve the issue, he wrote. ‘We could know who is paying low taxes because they are abusing and who is doing so because they’re investing.’
A spokesperson for ICAEW told Tax Journal that it did not respond to ‘individuals’ blogs’.
ICAEW’s Tax Faculty has warned that a widespread belief that some businesses can pay less than their fair share of tax can undermine confidence in the tax system.
ICAEW’s Tax Faculty has warned that a widespread belief that some businesses can pay less than their fair share of tax can undermine confidence in the tax system. An eight-page paper titled Taxing corporate profits: hard choices had not been published on the ICAEW website as Tax Journal went to press, but its author Andrew Gambier posted a link on Twitter on 20 December.
‘Low tax morale damages public finances,’ the paper said, adding that there were ‘good practical reasons’ for taxing company profits. The OECD’s project on base erosion and profit shifting sought to ‘ensure that all business profits are taxed somewhere’.
It stated that it was in everyone’s interest for there to be open, well-informed debate about ‘how to address tensions between the management of economies [including provision of capital allowances and other tax incentives] and perceptions of fairness in taxing corporate profits’.
Greater tax transparency could enhance credibility, the paper suggested, but could only go so far. Deferred tax did not appear to be well understood by commentators or the general public. ‘Because there are so many factors that feed into the tax base, no amount of disclosure can hope to encompass them all and few readers of accounts will be able to absorb all that is disclosed,’ it said.
Richard Murphy, director of Tax Research UK, whose campaign against tax avoidance continues to attract frequent coverage in mainstream media, claimed the paper was ‘an exercise in obfuscation’. Transparency could solve the issue, he wrote. ‘We could know who is paying low taxes because they are abusing and who is doing so because they’re investing.’
A spokesperson for ICAEW told Tax Journal that it did not respond to ‘individuals’ blogs’.
