September 30, 2022
Widespread mistrust among tax officials of the Big Four, says OECD survey

While most tax officials believe the Big Four accounting firms try to exploit loopholes in laws to help clients, at least some of the time, only a quarter believe they consistently follow the spirit of the law, an OECD study found.

Tax authority employees also believed that the Big Four – Deloitte, EY, KPMG and PwC – advise clients to use aggressive tax strategies, compared to local accounting firms, which are more effective than firms and government administrators. The middle underlines the lack of trust.

The study found widespread belief within state tax bodies that the Big Four promote artificial tax planning structures. A significant minority of executives said companies use their lobbying power illegally.

The Big Four dominate the global accounting and tax advisory industry, winning jobs from the world’s biggest companies. His tax department, some of which includes income from his small legal service operations, reported combined global revenue of $37bn in its most recent annual results.

Much of the public scrutiny of the Big Four in recent years has focused on their elite power and the quality of their audits of large companies following scandals such as Wirecard in Germany, 1MDB in Malaysia and Carillion in the UK. But some partners of the firms believe that their tax advisory and lobbying activities have a far greater impact on the global economy than their audit actions.

The Big Four were generally viewed by executives as formally co-operative, but findings published on Monday suggest that a sizable proportion believe companies try to exploit loopholes to help customers. tries.

OECD report Based on a survey of over 1,200 tax officials from 138 countries.

Nearly a quarter of those surveyed said the Big Four obeyed the spirit of the laws in most cases. In Latin America and the Caribbean, 45 percent said firms never do this or do so only in some cases. The similar figures in Africa, Asia and OECD countries were 40 percent, 29 percent and 30 percent, respectively.

The number of respondents who said firms were transparent with tax authorities in most cases, providing all relevant information when requested, ranged from 18 percent in Latin America and the Caribbean to 31 percent in the OECD.

The proportion who believe that the Big Four sometimes or often use their power illegally to influence tax policy and laws on behalf of customers varies from 26 percent in Asia to 37 percent in Latin America and the Caribbean. it happens.

While many of the findings highlighted distrust of the Big Four among public sector employees, the majority of respondents in most sectors who believed that firms encourage customers to be less compliant and pay less taxes were driven by those Heavy downvoted who said they encourage increased compliance.

PwC said it did not agree with all the views expressed in the report, but added that it agreed that “trust is a critical component to the effective operation of tax systems around the world”. It said its code of conduct “unequivocally acknowledges the importance of the public interest in any decision”.

EY said it would “as well as . . . work to clear misunderstandings and strengthen constructive dialogue between the taxpayer and the tax authority. It said it would “compliance with all laws and regulations in all jurisdictions”. is committed to; and adheres to the highest standards of professional conduct”.

Deloitte and KPMG declined to comment.

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