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KPMG Responsible tax project = end of FATCA?

KPMG have like, all the big four accountancy groups, had a mixed preformance record with the authorities around the world, but everyone should be grateful for their setting up the global Responsible Tax project in partnership with Jericho Chambers. This project brings together a broad array of voices on this subject in a new publication, What to Tax? This project seeks to reimagine what responsible tax looks like in an increasingly digital, global environment. The responsible tax idea exchange brings together nearly [100] different voices for interactive discussions and hands-on workshops. With participants representing a wide range of different perspectives from businesses to NGOs to academia to policymakers.

Jane McCormick, Global Head of Tax, KPMG International explains, “When we consider how different the world looks today, whether it be regulatory developments, technological innovation, globalization, new business or consumer demands, we need to ask whether the present tax systems are fit for today's realities. If not, how do we reimagine tax for the modern, world? That's what our external authors and KPMG professionals have tried to uncover in the What to Tax? publication.”

What to tax? - How to tax?

In a classic article by Chris Morgan, Tax Partner - Head of EU Tax Group, KPMG UK, on What to tax? - How to tax? on KPMG’s web-site (which may become compulsory reading in business schools and for politicians and which is the background to setting up the Responsible Tax project), he asks:

  • What is the purpose of tax? Morgan acknowledges that there are no exhaustive definitions but the following is a rough guide:
    • Raising revenue
    • Redistribution
    • Changing behavior
    • Supporting the economy. 
  • What are the principle of a good tax system? Morgan starts by saying, 
    • “Discussions on the principles of a good tax system often start with Adam Smith’s The Wealth of Nations. These can be summarized as: Proportionality, Certainty, Convenience, Economy, Efficiency, Simplicity, Sustainability, Stability, Consistency and Gender neutral.
  • How does the theory translate into practice? Morgan writes, 
    • “If the answers to what and how to tax were obvious, somebody would have produced a blueprint for a perfect tax system. That this does not exist is due to the fact that different countries have different social, cultural and economic characteristics, and there are varying individual views on how to balance all the factors and set priorities.” He groups important articles into four types of taxes on;
      • wealth creation
      • holding wealth
      • spending of wealth
      • sustainability.

Responsible Tax project

The aim of the Responsible Tax Project is shown by Morgan explaining that, “Some of the (listed) articles express conflicting points of view and undoubtedly there will be opposing views on some of the suggestions. In collating these essays, it is not our purpose to point to one answer or another, but rather to give each of these perspectives a platform, and indeed, to offer these ideas as stimulus for further discussion and debate.”

CTMfile take: Good on yer KPMG, interesting and important initiative, but how is this going to get rid of tax absurdies like FATCA?

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