ETAF comments on the IESBA exposure draft on ethical conduct in tax planning
ETAF submitted on Wednesday 17 May its comments on the IESBA exposure draft on proposed revisions to the International Code of Ethics for Professional Accountants to guide judgments and behaviours of professional accountants when providing tax planning and related services. The main amendments to the Code aim at setting a clear principle that professional accountants should advise on a tax planning arrangement only if they have determined that there is a credible basis in laws and regulations for it as well as providing practical guidance to assist professional accountants in navigating the “grey zone” of uncertainty when carrying out tax planning. Among other things, the IESBA is also proposing a description of tax planning. ETAF welcomed very much this initiative and generally approved the IESBA’s proposals. The guidance on how to navigate in the “grey zone” of uncertainty when carrying out tax planning activities will concretely help tax professionals in their daily work. We also supported the recognition that professional accountants serve the public interest by helping to facilitate a more efficient and effective operation of a jurisdiction’s tax system. Finally, we found this work very enlightening in the framework of the future initiative Securing the Activity Framework of Enablers (SAFE) of the European Commission and its expected definition of “aggressive tax planning”.
EU Member States reach agreement on DAC8
As expected, the Economic and Financial Affairs (Ecofin) Council reached an agreement on Tuesday 16 May on its position regarding the latest amendments to the directive on administrative cooperation in the area of taxation (DAC8). The amendments mainly concern the reporting and automatic exchange of information on revenues from transactions in crypto-assets and information on advance tax rulings for the wealthiest individuals. Among the changes brought by Member States compared to the initial proposal is the deletion from the text of the minimum penalties proposed by the European Commission in case of a breach of the reporting obligations of the DAC. During the public session, EU tax commissioner Paolo Gentiloni highlighted how the Commission believes tax identification numbers should be included in the context of the mandatory automatic exchange of information on country-by-country reports and said it was highly recommendable to make use of it as from 1 January 2024 onwards. The latter was also supported by the Belgian Minister of Finance Vincent Van Peteghem, in light of the good functioning of the safe harbours in the Pillar 2 directive. The Directive will be formally adopted once the European Parliament, which is only consulted in tax matters, will adopt its opinion on DAC8 in July.
European Commission updates its AML list of high-risk third countries
The European Commission updated on Wednesday 17 May the EU list of high-risk third-country jurisdictions presenting strategic deficiencies in their anti-money laundering/countering the financing of terrorism (AML/CFT) regimes. Nigeria and South Africa were added to the list while Cambodia and Morocco were delisted. This list takes into account the information from the Financial Action Task Force (FATF) and the changes decided at the last FATF Plenary of February 2023 in the list of jurisdictions under increased monitoring (so called grey list), the Commission said. European financial institutions and other obliged entities such as notaries, lawyers and accountants are required to apply enhanced vigilance in transactions involving one of the high-risk jurisdictions on this list. The update of the list takes the legal form of a delegated regulation, which will enter into force after scrutiny and non-objection of the European Parliament and the Council over a period of one month, which can be prolonged for another month.
European Commission unveils major Customs Union reform
The European Commission unveiled on Wednesday 17 May the biggest reform of the EU Customs Union since its establishment in 1968. Among other things, the Commission is proposing the creation of a new Customs Data hub to allow businesses that want to bring goods into the EU to log all the information on their products and supply chains into a single online environment. This technology will compile the data provided by businesses and – via machine learning, artificial intelligence and human intervention – will provide tax authorities with an overview of supply chains and the movement of goods, the Commission said. At the same time, this measure aims at cutting red tape for businesses, which will only need to interact with one single portal when submitting their customs information and will only have to submit data once for multiple consignments. Artificial intelligence will be used to analyse and monitor the data and to predict problems before the goods arrive in the EU, according to the Commission. Under the proposals, the Data Hub will open for e-commerce consignments in 2028, followed (on a voluntary basis) by other importers in 2032. A new EU Customs Authority would be set up to oversee this Data Hub and to deliver on an “improved EU approach to risk management and customs checks”. The European Commission also wants to expand the deemed supplier regime to all distance sales of imported goods into the EU that are facilitated by an electronic interface, irrespective of the intrinsic value of the consignment.
Sierra Leone becomes the 168th member of the OECD Global Forum
After the recent adhesions of Congo, Angola and Zimbabwe, it was Sierra Leone’s turn to join the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes and to become its 168th member, the OECD announced on Monday 15 May. Members of the Global Forum include all G20 countries, all OECD members, all international financial centres and a large number of developing countries. Like all other members, Sierra Leone will participate on an equal footing and is committed to combatting offshore tax evasion through the implementation of the internationally agreed standards of exchange of information on request (EOIR) and automatic exchange of financial account information (AEOI). Sierra Leonewill also join the Africa Initiative, a programme of work launched in 2014 to support domestic revenue mobilisation and the fight against illicit financial flows in Africa through enhanced tax transparency and exchange of information.
This newsletter contains information about European tax policies and developments gathered from official documents, hearings, conferences and the press. It does not reflect the official position of ETAF nor should it be taken as a written statement on behalf of ETAF.