New Ethical Standards for Business Tax Planning Unveiled by International Ethics Board

The International Ethics Standards Board for Accountants (IESBA) has taken a significant step in addressing concerns over tax avoidance by multinational companies by unveiling a new set of ethical standards for business tax planning.

The standards, which focus on ethical considerations in tax planning and related services, aim to establish a framework of expected behaviors and ethics for accountants. This move comes in response to revelations of tax strategies uncovered through leaks of confidential documents such 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, highlighting the urgency of addressing ethical issues in tax planning. The standards, certified by the Public Interest Oversight Board, have been incorporated within the IESBA Code of Ethics.

IESBA chair Gabriela Figueiredo Dias emphasized the importance of professional accountants maintaining a balance between their duty to clients and their duty to the public interest. The standards provide a principles-based framework and a global ethical benchmark for tax planning services and activities, aiming to guide accountants in making ethical decisions in this complex area.

In addition to determining the credibility of tax-planning arrangements, accountants are expected to consider the reputational, commercial, and wider economic consequences that could arise from the public’s perception of the arrangement. The standards will take effect on July 1, 2025, providing accountants with a clear ethical framework to navigate the complexities of tax planning and uphold trust in the system.