Too many taxmen are "moving the goal posts" on tax avoidance
Paris, 27 June 2000 - Corporate tax experts have protested against a growing tendency for tax authorities in many countries to reduce the scope for legitimate tax avoidance by new interpretations of national rules covering business transactions.
A statement by the Taxation Commission of the international Chamber of Commerce (ICC) said that companies increasingly faced penalties for bad faith or tax evasion based on such "recharacterizations". Unlike tax avoidance, tax evasion is illegal.
Tax incentives should never be withdrawn retroactively or called into question under "anti-abuse" rules, the ICC statement said. "A transaction which is specifically excluded from a specific anti-avoidance rule should not be caught by any general rules."
Commission Vice-Chairman Jean-Marc Tirard said: "In their haste to increase revenues from taxes on corporation, many tax administrations are showing a disquieting tendency to move the goal posts after the game has started.
"But ultimately, the tax authorities are inhibiting the capacity of business to create wealth and thus produce the profits that provide the tax yields on which governments depend."
Mr Tirard said that, while developing countries were the main offenders, tax authorities in several OECD countries were also adopting the same arbitrary approach to tax avoidance.
Wh
ile tax avoidance - unlike tax evasion - is within the law, ICC recognized that tax authorities are entitled to curtail it under rules on legal abuse. "The application of such rules must, however, be reasonable and equitable and respect at all times the fundamental principle of legal certainty essential for businesses."
The ICC Tax Commission is made up of corporate tax experts from all parts of the world. ICC's 72 national committees are communicating its appeal for more equitable application of anti-avoidance rules to their respective governments throughtout the world.
Statement on the application of anti-avoidance rules in the field of taxation
Commission on Taxation