Tax code of conduct for the global PwC network
Governments enact laws and enter into treaties with other nations so as to determine how companies and other taxpayers should be taxed. These laws are then interpreted by taxpayers, taxing authorities and, ultimately on occasion, by the courts.
It is a general principle that taxpayers have a legal right to manage their tax affairs provided they act within these laws. However, the global nature of the business world together with the complexity and competing priorities of national laws are such that it is not always clear where lines should be drawn. Accordingly, the member firms of the PwC1 Network have adopted the following code of conduct to assist their clients, other stakeholders and their respective partners and staff.
What PwC firms do
The main business objective of the tax practices of PwC firms is to support their clients to:
- understand and comply with their legal and regulatory obligations for taxation;
- plan their affairs so as to be tax efficient in the business or, where the client is not a business, financial decisions they make; and
- manage the tax risks they face. These include their compliance obligations and, in the case of businesses, corporate governance and tax related financial accounting risks centered on relevant internal controls and appropriate financial reporting.
Who PwC firms should act for
PwC firms should only work with clients that generally seek to demonstrate high standards of legitimacy and integrity in their business and financial activities. Before accepting clients, and in continuing to work with existing clients, PwC firms should look to satisfy themselves that the client intends to seek to comply with their legal and regulatory obligations in relation to taxation. In this regard we should pay particular attention to all of the following:
- the reputation of the client and the conduct of its/their activities;
- understanding who is behind the client in terms of control, influence and the legitimacy of any financial interests or funding;
- the integrity and reliability of management/individuals including their responses following situations in which actions may have fallen below the appropriate standards;
- relevant ethical, professional and regulatory requirements; and
- other relationships and potential conflicts of interest.
How PwC firms should act
PwC firms should:
- act in accordance with local laws and regulatory requirements;
- give proper disclosure as required by those laws or requirements;
- strive to apply the highest possible technical standards; and
- comply with professional standards of integrity and objectivity.
In addition, work performed by PwC firms should be undertaken in accordance with the following principles:
- All tax advice which results in positions taken in a client’s tax return must be supported by a credible basis in tax law. Tax law is often subject to differing interpretations. It is open to a client to take a position which differs from the most commonly held interpretation but this should be consistent with the standard applicable in each country concerned and, as a minimum, on the basis that there is reasonable support in law and proper disclosure.
- No tax advice should rely for its effectiveness on any tax authority having less than full facts. Any advice that a PwC firm gives should include advice on, and be based on the assumption that the client will make, relevant disclosures which will be sufficient both to comply with the law and to enable tax authorities to make further enquiries should they wish to do so. Disclosure will also include the registration of tax avoidance arrangements with the tax authorities where this is required by law or regulations, and any other information-sharing obligation to the tax authorities to which the client may be subject.
- Tax advice should be given in the knowledge of the actual facts and circumstances of the client concerned. PwC firms should always operate on the basis that they seek to know their clients and their business or financial affairs. Recommending a particular course of action should follow discussion with the client. Tax planning that does not fit with a client’s facts and circumstances should not be recommended.
- Tax advice should always involve discussion of the wider risks involved, including how a client’s actions might be viewed by others. Tax planning, like many other matters, involves the balancing of various risks. These risks include tax technical, legal and related areas (e.g. the risks that a tax authority may take a different interpretation of the relevant tax law, or that a particular tax planning strategy will not ultimately be effective), but also include reputational and commercial risks arising from the way others (e.g. shareholders, government, taxing authorities, etc.) might view a particular course of action. Advice from PwC firms should always involve proper consideration and discussion of these issues with the client. Whilst ultimately it is for each client to decide how they wish to plan their own tax affairs within the law, a PwC firm should be satisfied that the client has a full understanding at the appropriate level of responsibility of the potential consequences of their actions.
- We are advisers on tax planning and not principals or counterparties. Our business includes advising clients on tax planning. We will not act as principals or counterparties in tax planning with our clients as to do so would compromise our objectivity.
- There are certain types of planning arrangements which, although legal, PwC firms should not propose or recommend implementing to clients. PwC firms should advise clients of appropriate options available to them under the law. However, where a client is a company or other business entity, PwC firms should only propose or recommend the implementing of planning arrangements where at least one of the following apply:
- the underlying business arrangements have some commercial purpose other than the avoidance of tax; or
- the tax outcomes of the arrangements are consistent with the intention of the relevant tax law, other relevant law, regulation and administrative arrangements (as demonstrated by publicly available statements or evidence of an equivalent standard) in the country concerned or the international treaties it has entered into; or
- the planning has or creates economic or commercial consequences or effects including the necessary economic substance (as required by tax law, other relevant law, regulation and administrative practice) in each location to achieve those effects.
Where a client is not a company or other business entity (such as an individual or a trust), the above alternative tests are not appropriate. For example, concepts of commerciality may not be relevant to their actions (e.g. gifts). Nonetheless, PwC firms should seek to exercise judgement over the types of planning that should be proposed to, or implemented on behalf of, such clients.
Originally issued 2005 and most recently revised July 2013.
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