Code of Good Practices of Tax Professional Associations

Code of Good Practices of Tax Professional Associations

 

INTRODUCTION

The OECD defines the cooperative relationship as “a relationship between the taxpayer and the tax administration based on cooperation and mutual trust between both parties that implies a willingness to go beyond the mere fulfillment of their legal obligations” .

The development of the cooperative relationship involves:

• On the one hand, the simplification and facilitation of voluntary compliance with tax obligations, increasing the legal and operational security of taxpayers and tax professionals and Customs Agents and Customs Representatives.

• on the other hand, cooperation in the prevention of tax fraud.

Professional associations and colleges are a manifestation of the principle of organic representation enshrined in the Spanish Constitution, which is made effective through citizen participation in legislative tasks and other functions of general interest. These institutions are protected insofar as they satisfy social demands of general interest, so that they can participate effectively in the establishment and improvement of mechanisms to detect and satisfy them.

In general, professional associations and colleges are called upon to fulfil an essential function in our society, tending, among others, to the regulation of the exercise of professions, the defence of the professional interests of associates and members, attention to consumers and users of the respective professional services and participation in the preparation and modification of legal texts.

In the fiscal area, its work takes on an even greater dimension, in line with the weight of taxes in the Spanish economy, where they constitute an important part of public revenues that serve to cover the public expenses incurred by the country and guarantee its sustainability. To achieve these objectives, taxpayers must comply with their tax obligations in a timely and correct manner. It is the responsibility of the Tax Authority to collect - in accordance with legal provisions - the appropriate amount to ensure that citizens receive the aid and services expected by society, as well as to prevent and combat fraud, tax evasion and avoidance.

The proper functioning of the tax system depends largely on ensuring a balance between the rights and obligations of taxpayers and tax authorities, with the role played by tax professional associations and colleges being essential in this regard.

Aware of the important role of these tax intermediaries, a Forum for dialogue between the Tax Agency and the Associations and Colleges of Tax Professionals was created 8 years ago. Among other objectives, the Forum is used to disseminate the criteria of the Tax Agency in the application of taxes and to analyse regulatory changes. It also promotes the role of tax professionals as social collaborators in the application of taxes and the social commitment of these professionals to contribute to the rejection by taxpayers of fraudulent behaviour.

This Forum has represented an important step forward in transforming the traditional position of confrontation between the taxpayer and the Tax Administration into a relationship of cooperation capable of adopting joint solutions in defence of a higher goal such as the common interest. As a result of this objective, and with the intention of delving deeper into this idea, it is necessary to provide this instrument with a Code of Good Practices for Tax Professionals in which a set of principles and commitments are established to improve the communication process between the Associations and Colleges of Tax Professionals and the Tax Agency.

Therefore, the objective of this document is to propose and propose lines of action that will allow progress in the development of the cooperative relationship model between the Tax Agency and the Associations and Colleges of Tax Professionals, and that will directly impact the generalization of good tax practices by taxpayers with the support and endorsement of these groups of experts.

In this sense, good tax practices are the set of principles, values, norms and guidelines that define good behavior of the tax intermediaries of taxpayers with respect to the latter's tax obligations. To this end, it is necessary to ensure that taxpayers have a framework that allows them to understand and share the problems that may arise in the application of the tax system, since, ultimately, this will result in improved legal certainty and lower compliance costs, and will contribute to a reduction in conflict.

The conduct of the Tax Administration must be predictable and provide certainty and legal security to taxpayers when making their tax decisions, hence both parties in the relationship show interest in transparency in tax matters. Furthermore, Associations and Colleges will strengthen their reputational added value as a result of adhering to the Code.

This mutual trust will allow for an improvement in the existing relationship between the Associations and Colleges of Tax Professionals (and by extension, taxpayers) and the Tax Agency with the aim of achieving more efficient management and collection of taxes, as well as significantly reducing tax risk by having at their disposal a mechanism to act with the legal certainty required by a modern tax system.

Finally, the Code of Good Practices for Professional Associations and Colleges must have some inspiring principles and commitments that must be assumed by these and by the Tax Agency.

II. PRINCIPLES AND COMMITMENTS

The Tax Agency's efforts to improve the cooperative relationship must be aimed at establishing more agile and predictable communication channels with tax professionals, which will undoubtedly make it possible to implement important as legal certainty, trust and mutual agreement. This need has been highlighted on several occasions by members of the Forum of Associations and Colleges of Tax Professionals and the Associations and Colleges to which they belong, who demand greater flexibility, transparency and certainty in the tax system to adapt it to the real needs of taxpayers, and logically consequently, of tax professionals.

Furthermore, the Forum was created with the intention of promoting and facilitating the voluntary compliance of taxpayers with their tax obligations, strengthening the work of tax professionals, who play a fundamental role as social collaborators in the application of taxes. By providing advisory services, these professionals can make a decisive contribution to taxpayers' rejection of fraudulent conduct and aggressive tax planning practices that illegally tend to avoid or reduce taxation in Spain. In this sense, it is interesting that Associations and Professional Colleges assume commitments such as transparency, responsibility and professional ethics in the development of their functions, directing their activity towards their members recommending compliance with the corresponding tax obligations by taxpayers as one more aspect in the design and accounting representation of economic operations and rejecting approaches to minimizing tax costs by their clients that are artificial or clearly contrary to tax regulations. For its part, the Tax Administration must ensure the maintenance of a permanent channel of communication that serves to offer legal criteria that provide legal security and certainty.

1. Beginning

   • Voluntariness . Adherence to the Code of Good Practices of the Associations and Colleges of Tax Professionals is voluntary and individual, as it arises from the free conviction of assuming a series of recommendations aimed at improving the application of our tax system through increased legal certainty, reciprocal cooperation based on good faith and legitimate trust.

   • Bilaterality . The Code of Good Practices of Tax Professional Associations and Colleges contains commitments for both Tax Professional Associations and Colleges and for the Tax Administration in order to guarantee a balance between the rights and obligations of each of them in the tax field.

   • Transparency and trust , which involves the delivery of information beyond legal requirements, without prejudice to professional secrecy and the obligation of confidentiality. Tax Professional Associations and Colleges must play a leading role in detecting and seeking solutions to fraudulent tax practices in order to eradicate them and prevent their spread. For its part, the Tax Agency is obliged to take into account administrative precedents in its actions and will ensure the uniform application of the Tax Agency's criteria, for which the dissemination of these plays an essential role.

   • Mutual agreement on the scope and content of the information provided.

   • Collaboration. The effectiveness of the tax system depends on the conduct of taxpayers and tax intermediaries, such as their representatives, and the Tax Agency. Professional Associations and Colleges must collaborate to ensure that the information that taxpayers must provide reaches the Tax Agency correctly. For its part, the Tax Agency must make available to these Associations and Colleges the necessary information and explanations that may allow the taxpayer to correctly comply with their tax obligations.

   • Confidentiality and privacy of the information provided. Associations and Colleges of Tax Professionals must respect the authority of the Tax Agency to collect, disclose and retain information when permitted by law, while respecting the limits imposed by the duty of professional secrecy. For its part, the Tax Agency must protect the personal information to which it has access, without disclosing it to third parties, unless provided for by law.

   • Ease of communication , through the establishment of an online channel that allows streamlining the relationship between the Associations and Colleges of Tax Professionals, and the Tax Agency.

2. Commitments

   As noted above, the Code of Good Practices for Tax Professionals involves assuming a series of commitments by the parties.

   On behalf of the Associations and Colleges of Tax Professionals

   • Have a Code of Ethics for the voluntary tax advisory activity for its members, or an equivalent instrument, which must be accessible on the Association or College website.

   • Channel the questions to be asked to the Tax Agency and disseminate among its associates the general criteria and principles maintained by the Tax Administration.

   • Promote among its members relations with the Tax Agency in electronic format, as well as the use of existing instruments in the tax legal system to avoid conflicts.

   • Provide ongoing training and updating of technical knowledge to its members.

   • Establish quality standards for the services provided by its members. They must have voluntary compliance manuals that determine the work criteria and recommendations of the associates to their clients opposing conduct contrary to the legal system, among others: double accounting, interposition of legal entities, opacity of corporate structures, use of dual-use software, making cash payments that exceed legal limits, fictitious tax relocation operations, fraudulent use of bankruptcy proceedings, use of aggressive tax planning structures that illegally tend to avoid or reduce taxation in Spain, such as the improper use of hybrid instruments or the deduction of expenses for the purchase of securities with leverage when it is proven that the main purpose of the operation is to generate financial expenses that are tax deductible.

   • Report any incidents detected to the Tax Agency when a significant legislative change is promoted, as well as proposals for improving the general actions of the Tax Agency.

   • Promote regular meetings with the Tax Agency to assess the economic reality of businesses and the underlying problems in compliance with their tax and customs obligations, their associated indirect costs and the unfair competition that could occur in certain economic sectors due to non-compliance with their tax obligations.

   • Provide the Tax Agency, respecting the limits imposed by the duty of professional secrecy, with irregularities detected by associates when these affect the normal functioning of the tax system or competition in the market, offering evidence of the irregularities when available (cases of fraud).

   By the Tax Agency

   • Establish a communication channel on the Tax Agency website, through which Associations and Colleges of Tax Professionals can ask questions under the terms established between both parties.

   • Promote the improvement of procedures in order to avoid the need to verify documentation in person and avoid trips to the Tax Agency offices.

   • Without prejudice to the applicable regulations regarding the interpretation and qualification of tax and customs regulations, and the work of information and assistance to taxpayers, the Tax Agency will publish the criteria it applies in its control procedures, especially when significant legislative changes occur, as long as they are susceptible to being applied generally.

   • Improve the application of the tax system, reducing indirect tax burdens and promoting the use of new technologies, as well as encouraging the use of instruments established by the tax legal system aimed at reducing conflicts.

   • To guarantee, in the application of the tax system, the full exercise of the rights of taxpayers, as well as those of professionals and other social collaborators in the exercise of their profession and their legally approved regulatory standards.

   • Participate in courses or conferences on topics of interest to Associations and Colleges of Tax Professionals and Customs Representatives.

   • Organise outreach and communication campaigns specifically aimed at Associations and Colleges of Tax Professionals adhering to the Code of Good Practices for Tax Professionals, and collect their content in a section of the Tax Agency website.

   • Recognition of Associations and Colleges of Tax Professionals that voluntarily adhere to the Code of Good Practices for Tax Professionals.

   • Establish, together with the Associations and Colleges of Tax Professionals, communication strategies aimed at compliance with tax regulations, as well as the development of an educational culture in the tax field.

   • Analyze requests for unification of criteria raised by Associations and Colleges of Tax Professionals, when they report disparate actions by the Tax Agency in similar procedures.

3. Compliance guarantee.

   Both the Tax Agency and the Associations and Colleges of Tax Professionals that subscribe to this Code assume its principles and the commitments it entails. For this reason, it is considered appropriate to specify certain practices that both parties must carry out to ensure compliance with the agreement.

   • Verify the dissemination and application of good practices of the code in the internal and external actions developed by the Associations and Colleges and by the Agency.

   • Inform the Forum Secretariat of any actions or conduct that are known to be inconsistent with the principles and good practices set out in the Code and that could constitute non-compliance. The procedure for processing these communications will be developed in an Annex to this Code.

III. ADHERENCE TO THE CODE OF GOOD PRACTICES FOR TAX PROFESSIONALS

1. Subjective scope of application .

   The Code of Good Practices for Tax Professionals is based on the free adhesion of each of the Associations and Colleges of Tax Professionals, which voluntarily assume the principles, commitments and recommendations contained therein.

   This Code has been prepared and approved by the Forum of Associations and Colleges of Tax Professionals to promote a mutually cooperative relationship between the Tax Agency and the Associations and Colleges of Tax Professionals that subscribe to it.

2. Accession procedure.

   The decision of the Associations or Colleges of Tax Professionals to adhere to the Code of Good Practices for Tax Professionals must be formalized through an agreement that will be communicated to the Tax Agency through the corresponding Association or Professional College. Likewise, they may communicate their withdrawal at any time.

   Adherence and withdrawal must be to the entire Code; partial adherence or withdrawal to specific sections of the Code is not admissible.

   The Tax Agency may provide information on its website about the Associations or Colleges of Tax Professionals adhering to the Code, provided that it obtains the express consent of the Association or College affected, through the Technical Secretariat of the Forum.

   The creation of a logo to identify the Associations and Colleges of Tax Professionals that have adhered to the Code will be studied.

3. Monitoring Commission.

   The Plenary Session of the Forum of Associations and Colleges of Tax Professionals will determine the creation of a Monitoring Committee for the application of the Code of Good Practices for Tax Professionals, composed of six members, appointed equally by the Tax Agency and the Associations and Colleges of Tax Professionals participating in the Forum. The members of the Monitoring Committee will be appointed annually, with the representatives of the Associations and Colleges of Tax Professionals rotating. The position of President will be held by one of the members appointed by the Tax Agency and that of Secretary will be held by a member from among those appointed by the Associations and Colleges of Tax Professionals.

   The decisions of the Monitoring Committee shall be adopted by consensus among its members.

   The Forum of Associations and Colleges of Tax Professionals is the headquarters where the Tax Agency and the Associations and Colleges of Tax Professionals must study and agree on the inclusion of new matters in the Code and the interpretation of its recommendations. One of the primary objectives of the Monitoring Committee is to present to the Committee the questions of interpretation that it considers appropriate, as well as the opportunity to address new matters, without prejudice to any other initiatives that may assist in the materialization and implementation of the Code. In particular, the Monitoring Committee will establish the treatment practices in cases of non-compliance with the commitments of the Code.

   The Monitoring Committee will meet as a general rule once every six months, without prejudice to the possibility of meeting as many times as deemed necessary by the representatives of the Tax Agency or the Associations and Colleges of Tax Professionals.

   The actions of the Monitoring Committee will be guided by the principles of transparency, mutual trust, good faith and loyalty that govern the Code of Good Practices for Tax Professionals.

   All data, reports or background information of any kind submitted to the Monitoring Committee or obtained by it in the performance of its duties shall be confidential, and its members shall be bound to the strictest and most complete confidentiality regarding them.

   The Monitoring Committee will not be able to take cognizance of specific situations and therefore cannot intervene in any ongoing tax procedure.