Responding to revelations by the publication of such investigative journalism as the Pandora Papers and the Paradise Papers, which exposed widespread tax avoidance by multinational corporations—aided by accounting firms, law firms and banks—the International Ethics Standards Board for Accountants (IESBA) released a proposal for revising the International Code of Ethics for Professional Accountants to address tax planning and related services.

In its announcement of the Proposed Revisions to the Code Addressing Tax Planning and Related Services, the IESBA summarized its ethical framework, saying that it:

● Explains the types of threats to compliance with the fundamental ethics principles of the code that might be created when professional accountants are involved in tax planning;

● Sets a clear principle that professional accountants recommend or otherwise advise on a tax planning arrangement only if they have determined that there is a credible basis in laws and regulations for it;

● Requires consideration of the reputational, commercial and wider economic consequences that could arise from the way stakeholders might view the tax planning arrangement before determining whether to proceed with the recommendation or advice.

● Provides practical guidance to assist professional accountants in navigating situations of uncertainty when carrying out tax planning; and

● Deals with other practical matters, including disagreement with the client or management or those charged with governance, and documentation.

“The accountancy profession plays a trusted role in facilitating the efficient and effective operation of a jurisdiction's tax system and in making it a pillar of the economic system,” IESBA chair Gabriela Figueiredo Dias said in a statement reported by Accounting Today. “However, it is crucial that there are clear and robust ethical guardrails when professional accountants assist their employing organizations' and clients' tax planning to safeguard the public interest. These timely proposals are also designed to provide professional accountants with practical guidance to navigate the ethical challenges in this complex area.”

The IESBA will hold three webinars at the end of February to explain these revisions. Comments on the exposure draft will be accepted until May 18.