Code of Best Tax Practices
Drawn up and approved by the Large Enterprises Forum to foster a mutually co-operative relationship between the Tax Agency and the companies subscribing it.
Code of Best Tax Practices
INTRODUCTION
Companies play a very important role in social life, not only as generators of employment and wealth, but as agents of development in the communities in which they are inserted. Companies are aware of this and for years have been seeking to strengthen their social responsibility, which involves following a series of behaviors that go beyond respect and strict compliance with laws and regulations, to adopt positions of active and voluntary contribution to society. social, economic and environmental improvement.
The existence of an adequate tax system is a prominent element of a country's institutional framework, which justifies citizens, social agents and authorities being actively involved for its better development and effective application.
Along these lines, this Code of Good Tax Practices contains recommendations, voluntarily assumed by the Tax Administration and companies, aimed at improving the application of our tax system through increasing legal certainty, reciprocal cooperation based on good faith. and legitimate trust between the Tax Agency and the companies themselves, and the application of responsible tax policies in companies with the knowledge of the Board of Directors. These recommendations are formulated on a non-exhaustive and flexible basis, allowing companies that adopt them to adapt them to their own characteristics.
Correct tax management by companies and greater legal security in tax matters leads to greater strength in their economic results, reducing their risks, including reputational ones.
The principles of good faith and legitimate trust that legally govern the functioning of Public Administrations take on special relevance in the current tax system. Not only because of the greater demands of its regulations, but also because economic systems require companies, and especially those with an international component, to have greater complexity in their operations. In this scenario, the adequate management of the risks inherent in compliance with tax obligations by companies demands greater reciprocal cooperation with the Tax Administration.
All the more so when one of the two main lines of action of the Tax Agency in accordance with the regulations that regulate it consists of the provision of information and assistance services to the taxpayer. Beyond the fact that the Tax Agency guarantees the full exercise of taxpayers' rights in the development of its activity, a modern Tax Administration requires greater proximity to companies, both as main taxpayers and for their valuable performance as tax collaborators. This proximity must be characterized not only by a better and more detailed knowledge of the taxpayer's actions, but also by ensuring maximum publicity and durability of their interpretative and action criteria. In short, it is this commitment of the Tax Administration that must provide the necessary legal security to taxpayers and allows better and more effective compliance with tax obligations. For all these reasons, tax management must be configured, not as a procedure of opposing parties, but as a collaboration for a common purpose.
Within this framework, the objective of the Code is to promote a reciprocally cooperative relationship between the State Tax Administration Agency (hereinafter, Tax Agency) and the companies that subscribe to it, a relationship based on the principles of transparency and mutual trust, which must give rise to Therefore, to its development in accordance with the principles of good faith and loyalty between the parties, all of which will increase the effectiveness of the controls of the Tax Administration and reduce the legal uncertainty to which companies and companies could be exposed. the litigation that arises between the two.
GOOD TAX PRACTICES
1. Transparency, good faith and cooperation with the Tax Agency in business tax practice.
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Good practices that must be promoted by Companies are all those that lead to the reduction of significant tax risks and the prevention of behaviors that may generate them.
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Companies will avoid the use of opaque structures for tax purposes, understood as those in which, through the introduction of instrumental companies through tax havens or territories that do not cooperate with the tax authorities, they are designed with the purpose of preventing the knowledge, by the Tax Agency, of the ultimate person responsible for the activities or the ultimate owner of the assets or rights involved.
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Companies and the Tax Agency will collaborate in the detection and search for solutions regarding those fraudulent tax practices that may develop in the markets in which they are present to eradicate those that already exist and prevent their extension.
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The Board of Directors or equivalent body will be informed of the tax policies applied by the company. Before preparing the annual accounts and submitting the Corporate Tax return, the person responsible for the company's tax affairs will inform the Board, directly or through the Audit Committee, of the policies followed during the year.
Notwithstanding this, in the case of operations or matters that must be submitted to the approval of the Board of Directors or equivalent body, the tax consequences thereof will be reported when they constitute a relevant factor.
2. Transparency and legal certainty in the application and interpretation of tax regulations by the Tax Agency.
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The Tax Agency will ensure that administrative precedents are taken into account in its actions and will ensure that the unity of criteria of the Tax Administration is respected in the interpretation of the regulations.
To this end, the Tax Agency will apply the interpretative criteria that arise from the administrative and jurisprudential doctrine . In the absence of such doctrine, when there are doubts about the criteria to be applied, a report will be requested from the General Directorate of Taxes within the scope of its jurisdiction.
The Department Directors of the Tax Agency will inform the Permanent Management Committee of the same of those interpretative criteria that they intend to apply in their actions, whenever they refer to issues of special importance or that may generate significant controversies with taxpayers and in which There is no criterion established by the General Directorate of Taxes, the Central Economic-Administrative Court or the Courts of Justice.
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Without prejudice to the applicable regulation regarding the interpretation and qualification of tax regulations and the work of information and assistance to taxpayers, the Tax Agency will make public the criteria that it applies in its control procedures as long as they are susceptible to being applied generally.
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The Tax Agency will establish appropriate procedures to allow those taxpayers who have doubts about the tax treatment of certain operations or operations to know, with the speed required by the case, the criteria that the Administration would apply in such operations or operations.
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Taxpayers may submit an explanatory annex along with the tax returns, stating the criteria followed in their preparation as well as the facts on which they are based, which, if the facts are adapted to reality and the criteria are reasonably founded , will be evaluated favorably by the AEAT for the purposes of determining the diligence, fraud or fault referred to in the General Tax Law.
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The Tax Agency, in its activity of applying the tax system, guarantees the full exercise of taxpayers' rights .
3. Reduction of litigation and avoidance of conflicts.
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The Tax Agency and companies aim for their relationships to be constructive, transparent and based on mutual trust. To achieve this, both parties must seek to reduce conflicts arising from the interpretation of the applicable regulations, favoring the use of the instruments established by the Tax Legal System for this purpose.
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The Tax Agency and the companies will use all the possibilities offered by the contradictory nature of the inspection procedure, promoting agreement in all procedural phases in which this is feasible and assuming the following practices:
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The Tax Agency will provide the taxpayer with knowledge of the facts susceptible to regularization as soon as possible, so that, throughout the inspection actions, the greatest possible exchange of opinions is facilitated and the correction of the actions of the Tax Agency is made possible as soon as possible. company in the future.
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The Tax Agency will inform the taxpayer, in the hearing process prior to the inspection minutes, of the facts that influence the eventual regularization proposal. Likewise, at his request, the essential concepts that will be regularized will be indicated and an attempt will be made to provide, as a guideline, a provisional quantification of the settlement that would result in accordance with the data available at that time.
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The Tax Agency will incorporate in the motivation of the acts on which the regularization proposal is based an express assessment of the taxpayer's allegations.
To facilitate that the allegations presented are properly assessed, companies will try to inform the body that processes the procedure as soon as they present them, indicating the place of presentation and trying to provide a copy of them, preferably by electronic means.
Likewise, companies will endeavor to report requests for extension of the deadline for making allegations as soon as they are submitted, indicating the place of submission.
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The Tax Agency will effectively address, in group inspections, any allegations that may be made against the proceedings carried out on the dominated companies, prior to the consolidated report.
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The Tax Agency will ensure that all factual issues relevant to carrying out the settlement, as well as the correlative evidentiary activity, are known and discussed adequately during the inspection actions prior to the signing of the minutes or, where appropriate, in the complementary actions that are agreed upon. to that effect.
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The Tax Agency and the companies will promote agreements and conformities in the inspection procedure.
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Likewise, efforts will be made to ensure that all relevant factual issues to investigate, where appropriate, the sanctioning file, are known and discussed appropriately prior to its resolution.
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To reduce the indirect tax burden that compliance with certain obligations and attention to certain procedures represents for taxpayers, the Tax Agency will try to delimit as much as possible the purpose of the requirements and informative statements and will try to limit the duration of the verification and verification procedures. investigation to the time strictly necessary to be able to carry out adequate control action.
For their part, companies will try to provide the information and documentation requested by the Tax Agency, as well as all that may be relevant for the development of the corresponding procedures, as quickly and completely as possible.
ANNEX
ADHESION TO THE CODE OF GOOD TAX PRACTICES AND MONITORING OF ITS APPLICATION
1. Subjective scope of application.
This Code has been prepared and approved by the Large Business Forum to promote a reciprocally cooperative relationship between the Tax Agency and the companies that subscribe to it.
The Code will be applied by the Tax Agency and by all companies that adhere to it, with the affected parties committing to its development and implementation in their respective areas of competence. However, the Tax Agency will gradually develop section 2.3. of the same, taking into account the number of participating companies.
2. Accession procedure.
The decision to adhere to the Code of Good Tax Practices must be formalized through an agreement of the Board of Directors or equivalent body of the entity, which will be communicated to the Tax Agency. In the same way, you can communicate your withdrawal at any time.
Adherence and withdrawal must be to the entire Code, and partial adherence to or withdrawal from specific sections of the Code is not admissible.
The Tax Agency may inform which entities adhere to the Code, unless expressly stated against the affected company, through the Technical Secretariat of the Forum.
The annual corporate governance report of the companies adhering to the Code must reflect their effective compliance with its contents. In the event that said issue is not reflected in the report, it will be understood, unless there is sufficient justification, that the entity has decided to waive it.
3. Monitoring Commission.
The Plenary Session of the Large Business Forum will determine the creation of a Monitoring Commission for the application of the Code of Good Tax Practices, composed of six members, appointed annually in equal parts by the Tax Agency and the companies participating in the Forum. The status of President will fall to one of the members appointed by the Tax Agency and that of Secretary to a member from among those appointed by the companies.
The agreements of the Monitoring Commission will be adopted by consensus among its members.
The Large Companies Forum is the headquarters where the Tax Agency and Large Companies must study and agree on the inclusion of new matters in the Code and the interpretation of its recommendations. It is a primary purpose of the Monitoring Commission to present for its consideration both 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 help the materialization and implementation of the Code.
The Monitoring Committee will meet generally once a semester, without prejudice to the fact that it may do so as many times as is considered necessary by the representation of the Tax Agency or the companies.
The actions of the Monitoring Commission will be guided by the principles of transparency, mutual trust, good faith and loyalty that govern the Code of Good Tax Practices.
All data, reports or background information of any nature presented to the Monitoring Committee or obtained by it in the performance of its functions will be confidential, and its members will be obliged to maintain the strictest and complete secrecy regarding them.
The Monitoring Commission will not be able to learn about particular situations of the companies adhering to the Code, and therefore will not be able to intervene in any tax procedure in progress.