Global Accountants’ Ethics Board Releases New Standards for Tax Professionals Following Global Tax Scandals

Global Accountants’ Ethics Board Releases New Standards for Tax Professionals in Response to Tax Scandals

In the wake of numerous global tax scandals, including the International Consortium of Investigative Journalists’ (ICIJ) Paradise Papers and Pandora Papers investigations, the International Ethics Standards Board for Accountants (IESBA) has unveiled a new set of standards for tax professionals. The aim is to rebuild public and institutional trust in the tax planning industry.

The updated ethics guidelines, released by the IESBA last week, now include advice urging accountants and other tax professionals to consider the public interest when working on tax planning for clients. This marks the first time such advice has been incorporated into the standards.

The move comes in response to public scandals involving aggressive tax avoidance schemes that have been deemed harmful to the public interest. The IESBA cited revelations from ICIJ’s global investigations as a driving force behind the new standards.

According to the IESBA, the new standards establish a clear framework of expected behaviors and ethics provisions for all professional accountants. They address concerns about tax avoidance and the role of consultants in light of recent revelations from investigations like the Paradise and Pandora Papers.

The guidelines are designed to encourage tax professionals to go beyond simply following the letter of the law. By using IESBA’s principles-based framework and global ethical benchmark, professionals are urged to consider the ethical implications of their actions.

Gabriela Figueiredo Dias, Chair of the IESBA, emphasized the importance of ethical behavior in the tax planning industry. She noted that while certain behaviors may be legal in some jurisdictions, they may not always be ethical.

The IESBA guidelines are utilized in over 130 jurisdictions and have been adopted by more than 30 of the largest accounting firm networks. The board conducted extensive outreach and engaged with stakeholders globally to develop the new standards.

While the release of the ethical guidelines is a significant step, experts like Sean Bray from the Tax Foundation believe that public pressure and corporate incentives to do the right thing will also play a crucial role in curbing tax avoidance. Bray emphasized the importance of policymakers understanding the design of tax laws to minimize grey areas that can lead to unethical decisions.

The new IESBA guidelines are set to take effect on July 1, 2025, with the hope of guiding tax professionals towards more ethical practices in the industry.