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Ward Speaks Cautiously in Favor of Tax Harmonization at World Economic Forum DAVOS, Switzerland, Feb. 1, 2001 (AccountancyMagazine.com) Tax harmonization could take up to 20 years to achieve and should be put at the top of countries' political imperatives, Institute of Chartered Accountants in England and Wales president Graham Ward told delegates at the World Economic Forum. Speaking at the summit in Davos in Switzerland today, Ward said that far-reaching structural changes to tax systems will be necessary if countries are to harmonize taxation. "The inevitable disadvantages of tax harmonization to some countries would render it politically impossible to engineer change with any haste," said Ward. He added that the European Union should begin by harmonizing the areas of taxation that cause practical problems and increase costs, particularly in international trade. "A realistic starting point would be to identify particularly pressing problems faced by trans-nationals, such as adopting a common approach to transfer pricing," he said. He acknowledged the OECD's work in this area but called for measures to go further, "because trans-national companies prize clarity, certainty and continuity in a tax regime." The annual forum is attended by economic movers and shakers from around the world. Ward spoke on the increasingly hot topic of tax harmonization as he hosted a discussion on the subject. He also touched on personal taxation, social security contributions and benefits for employees working abroad. "Tax and social security systems should not discourage people from working in other countries by discriminating against them. A typical example is the different tax treatment adopted by countries in respect of pensions contributions and benefits. This can lead to loss of relief and unexpected tax liabilities. What is required is a common system of providing tax relief for contributions and taxing pension income." Ward said that the significance of the tax system in determining where multi-nationals invest and trade needed to be considered. He said that tax competition should not be considered harmful, that tax havens are not by definition corrupt. "Distortions or perceived excesses occur when governments fail to develop or implement fiscal policies with regard to efficient stewardship of the country's economy. What we should aim for are more efficient tax systems." The expansion of global trade, he added, would end up forcing a natural convergence of tax systems and would drive the move towards global corporate standards. Send comments to information@smartpros.com Copyright 2001 AccountancyMagazine.com. Used with permission. |
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