We have been discussing in our taxprecision.com blog the main four issues to be addressed to terminate international tax avoidance and we are delighted to see that the OECD is targeting one of them, which relates to the role of international tax advisers.
After focusing on the development and implementation of the BEPS project, the OCDE must continue policing the mechanism behind tax fraud. The Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC), held on last 16-17th January in Paris becomes a major piece to resolve this issue.
The JITSIC is an informal gathering of OECD’s member’s tax agencies to exchange information on tax investigations. In the last meeting in Paris this January, they listed up to 100 intermediaries including tax advisers, lawyers, bankers and accountants.
Focusing on the professionals behind tax fraud is one of the main four issues, from my point of view, to terminate international tax avoidance.
International tax advisers lacked an explicitly agreed code of ethics and professional standards and based on that; virtually any professional can provide international tax advisory services. This lack of regulation poses an issue as not everyone provides consulting services following clearly defined ethics.
The other three points to consider on top of that, are
1.- The lack of implementation of universal jurisdiction principles to tackle international tax evasion does not allow to create an efficient and effective jurisdictional environment for states to prosecute tax fraud worldwide.
2.- The lack of an international agreement on the legal meaning of “tax avoidance” effectively creates a limbo, which in reality becomes a virtual ‘tax haven’ for tax evaders. Tax evasion means different things in different jurisdictions, and this is something that must be agreed.
3.- The media outlets and investigative journalism could play a significant role if they were not so concerned with maintaining profitability at any costs, leaving aside social responsibility. As an example, we can use the “Panama Papers” or “Football Leaks” where the viral impact was based on the celebrities involved and not in the substance of the cases presented. In fact, the majority of leaked documents were outdated and irrelevant from a legal point of view, confirmed by the little legal impact they had.
Articulating and clarifying the mechanisms of tax avoidance and the people behind is a significant step to restore public confidence in the financial institutions and the tax system, something badly needed which will ensure the adherence to the rule of law.