Tax policy reforms by G7 face aftershocks: ACCA

24
Staff Reporter

New tax policies announced recently by G7 communiqué will face hurdles as the proposals are yet to be agreed by the G20 and other jurisdictions, says ACCA today, asserting that the three foundations for a sound tax system are simplicity, certainty and stability.

Jason Piper, head of tax and business law at ACCA says: ‘Committing to a global minimum tax of at least 15% on a country by country basis is a challenge, predicated on the agreement of other jurisdictions’ governments.

To be truly effective it will need to go beyond the G7, and even the G20, to the OECD’s Inclusive Framework of 139 countries, requiring compromise as governments surrender legal sovereignty in return for an effective, practical framework.

‘And the move for multinationals to pay tax in the countries where they do business – and not just were they are headquartered – will create new legal and accounting challenges for banks, businesses and tax authorities.’

ACCA says the main challenges are about achieving true parity and fairness. Jason Piper explains: ‘This is indeed a seismic announcement, but it’s more a foreshock than the main event.

Corporate taxes contribute only a small proportion of total revenues, and these measures capture only a tiny fraction of even that.

The real heavy lifting is done by consumption and personal income taxes, and that is where reforms could make a real difference to the sorts of societies we live in.

In 2019, ACCA with CA ANZ and IFAC published a report called G20 public trust in tax: Surveying public trust in G20 tax systems.

This showed that most people surveyed for this report were supportive of cooperation on international tax policy to create a more coherent international tax system (69%).

 

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