The European Commission’s public consultation on a proposal for a Directive to tackle the role of enablers that facilitate tax evasion and aggressive tax planning (Securing the Activity Framework for Enablers – SAFE), expected in the first half of 2023, comes to an end today. Representing the voice of 215 000 regulated tax advisers at EU level, the European Tax Adviser Federation (ETAF) is appealing to the Commission to not pick the wrong target.
First and foremost, ETAF firmly rejects the Commission's reductive portrayal of an entire profession as "enablers" and urges it to correct this generalisation. Regulated tax professionals play an indispensable role in the tax collecting process of their countries. This position is largely based on trust in the quality of their advice on the one hand and a regulatory framework that requires tax compliance on the other hand. Regulated tax professionals are in fact the opposite of “enablers”.
“Such a qualification is simply inadmissible. It would create a great and undue reputational damage to all law-abiding tax professionals”, ETAF President Philippe Arraou reacted.
Because their professional laws already require them to provide tax advice in line with tax compliance, we advocate that regulated tax professionals should be excluded from the scope of the future Directive.
“When it first unveiled its plan, the European Commission promised to target only the rotten apples and not to overburden a whole profession. I regret that this public consultation is taking the opposite path. The Commission is missing the right target here.”, Philippe Arraou added.
To tackle the core of the problem and avoid disproportionate bureaucracy, it is necessary to target non-regulated tax professionals, operating outside any binding professional law framework, and to strictly limit the material scope to complex structures in non-EU countries.
Furthermore, a clear definition of aggressive tax planning is of utmost importance for the daily work of tax professionals. In particular, referring to the “spirit of the law” as proposed by the Commission cannot be a suitable criterion. It is the task of the legislator to exclude loopholes in the legislation which later turn out to be undesirable by means of clearer legislation. It cannot be the task of tax professionals.
ETAF also appeals to the EU legislators to strictly separate tax evasion, which is a criminal offence punishable by law in all Member States, from aggressive tax planning, which is legally legitimate, although ethically doubtful.
Concerning the different options proposed by the Commission, we are critical of any measure which will deter legitimate tax planning practices, put tax advisers under a general suspicion, create legal uncertainty or affect existing professional regulations.
“Most of the proposed options will undoubtedly create more administrative burden for tax professionals and tax administrations without necessarily leading to an increase of tax revenues”, Philippe Arraou concluded.
All in all, ETAF remains convinced that ensuring a minimum level of professional regulation by making tax advice a reserved activity everywhere in the EU would be a much more effective tool to achieve the Commission’s goal of effectively curbing down tax evasion and aggressive tax planning.