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ACCA welcomes increased transparency in cross-border tax arrangements

Proposed changes to the monitoring and enforcement of cross-border tax arrangements in Europe have been welcomed by ACCA.

The Association of Chartered Certified Accountants (ACCA) has welcomed new proposed legislation from the European Commission (EC) to increase transparency in the field of taxation in cross-border arrangements.

Following a series of high-profile cases of perceived tax avoidance in recent months, the EC has moved to close a series of loopholes in tax management regulation that will provide greater clarity and transparency in this complex area in the years ahead.

Focusing predominantly on tax planners and advisers, the changes will impact cross-border arrangements where several hallmarks of possible abuse can be found:

  • use of financial losses to reduce tax liability 
  • use of special beneficial tax regimes
  • arrangements through countries that do not meet international good governance standards

The obligation for reporting will be borne by intermediaries in these cross-border schemes and the legislation will help to provide a clearer picture of possible abuses by creating a new centralised database for tax planning arrangements.

Chas Roy-Chowdhury, head of taxation at ACCA, commented: ‘The overarching aims of the Directive, which are to close certain existing loopholes and increase transparency and access to the right information at an early stage, are welcome. 

‘We agree that information which currently escapes from the scope of the existing legislation has to be captured in a way or another.’

Accountancy practices offering taxation services must therefore understand the impending change in legislation and how it could affect their provision of services. Failure to comply could result in severe sanctions, and further details are still to be announced.

Mr Roy-Chowdhury concluded: 'The Commission proposal covers all tax advice providers and not only certain professions, such as accountants or lawyers. We see this as a positive development’.