Deloitte Chief Challenges Tax Authorities
18 June 2013
Posted by: Author: Robert Lee
Author: Robert Lee
"Businesses and tax authorities need to apply clear tax law so that companies know how much to pay and tax authorities how much to collect," Deloitte's Chief Executive has claimed.
Writing in The Times, David Sproul reflects on a number of tax issues currently receiving attention from both politicians and the media.
For instance, the G8 Summit will today discuss initiatives for cracking down on tax evasion and aggressive tax avoidance. However, Sproul warns that any attempt to make the global tax system more transparent must be accompanied by effective reforms.
Sproul's article argues that global tax authorities ought to consider adopting new methods of working if they hope to overcome what he calls "modern challenges." Mutual agreement procedures between different tax bodies would also help reduce the risks posed by double taxation.
Nonetheless, while Sproul believes that authorities should focus on improving the effectiveness of their work, they must also "tread carefully" when it comes to demands for financial transparency. Country-by-country public reporting could prove especially costly for businesses, and might "place some businesses at a competitive disadvantage and overburden with too much data and too little insight."
Sproul instead favors improved narrative reporting. This "could help companies to explain underlying tax drivers to a range of public stakeholders."
In the case of developing countries, Sproul's contention is that there should be greater support for governmental efforts to enhance tax systems and improve their responses to complicated cases. More emphasis needs to be placed on the provision of training and dissemination of knowledge in such areas, Sproul adds.