• Register
Return to: Home > Comments > Businesses want clear guidelines on tax planning

Businesses want clear guidelines on tax planning

By Francesca Lagerberg, global leader for tax services at Grant Thornton International

The media is awash with stories on the tax planning activities of large corporates. In the US, Apple chief Tim Cook has had to answer some tough questions with regard to the levels of cash his company holds abroad. And in the UK, senior leaders from Amazon, Google and Starbucks have been hauled in front of a hostile government committee to explain why they pay relatively little corporation tax in that country.

What's interesting is that these companies are not in anyway being accused of breaking the law. The issue is not tax evasion - which is illegal - but tax avoidance - which is not. The debate has moved on to whether these companies ought to be paying more. Elected officials now say it has become a question of morality.

But morality is a nebulous concept, certainly in the business world. Whose morality do we use as a base for deciding what constitutes a 'fair share'? Yours? Mine? Businesses need things in black and white. They have a responsibility to their investors and shareholders to keep costs down. Simply telling them to pay their 'fair share' is not a viable alternative to a clear set of rules or principles.

According to the latest research from the Grant Thornton International Business Report (IBR), a quarterly survey of 3,200 businesses in 44 economies, the vast majority of businesses (68%) would welcome more global cooperation and guidance from tax authorities on what is acceptable and unacceptable tax planning, even if this provided less opportunity to reduce tax liabilities.

Current tax planning rules are archaic, and businesses need clear guidelines for a modern, digital, internet-powered world. But trying to modify individual countries' tax laws is unrealistic as it would put them at a relative disadvantage to other countries.

Rather, we need to design a system that works globally and simplifies and clarifies the tax code, which would be good for businesses, consumers and governments. The tax system needs to be addressed through international institutions such as the OECD and the UN, and via global groupings like the G20. Using these channels meansany modification of corporate tax laws would be worldwide, understandable to all and enforceable.

Top Content

    Blockchain and the Big Four: does it deserve all the hype?

    Although still in its infancy, blockchain is one of the most talked-about technologies of 2018. Will the blockchain bubble burst, or will it live up to its reputation as the ‘new internet’? Eleanor Jerome investigates

    read more

    Malaysia: Ready to show its strength

    Recent changes have enhanced the quality of audit reports in Malaysia, giving the profession a welcome opportunity to demonstrate its value to clients. Paul Golden reports

    read more

    China: Regulating the Chinese dragon

    Harsh regulatory actions and looming US trade wars have been dampening expectations in a Chinese market still full of potential, finds Jonathan Minter

    read more

    Indigenous Australians: New checks and balances

    With fewer than 40 known qualified Indigenous Australian accountants, Jonathan Minter speaks to Shelley Cable from PwC Australia about how increasing this number is an important part of improving the financial literacy of Indigenous communities

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.