From Euractiv, a statement that would have been unthinkable even just a couple of years ago:
“Publishing turnover, staff numbers, taxes paid and subsidies received in every country banks operate in, could boost competitiveness, increase lending and bolster financial stability, the independent study by auditors PwC will find. It will fight tax evasion and not harm investment or result in excessive compliance costs for banks, the report will say once published.”
This research, carried out for the European Commission as due diligence for the fourth revision of the EU Capital Requirements Directive, is highly welcome, and it comes in the context of a statement by PwC’s chairman, summarised by the FT:
“The chairman of the world’s largest tax practice says tax advice has a moral dimension to it that professional services firms must keep in mind when advising clients.”
That’s a no-brainer, but it seems that Big Four firms in the past have had a hard time even considering it. This also follows a separate piece of research by PwC showing that most CEOs back country by country (CbC) reporting.
CbC reporting – a project originally set up by Richard Murphy for TJN – faced opposition and even derision for some years. Large accountancy firms such as PWC have in the past been sceptical about country-by-country reporting, and this is a ringing endorsement of the general principle. Indeed, campaigners had earlier opposed PWC’s role in this research project, after it told a recent OECD consultation on the issue it wanted “a more stringent confidentiality regime” and called for “real sanctions for countries that violate confidentiality provisions.”
The EU Capital Requirements Directive, adopted by the European Parliament and European Council in 2013, requires that banks must publish CbC data from 2015, though a negative report from PwC would have given the Commission grounds to delay it.
Now get this grab-bag of goodies, again via Euractiv:
“PwC analysis will say the increased rigour of reporting would give a better picture of the true economic situation of a bank. This would make it easier for regulators to oversee it, resulting in more financial stability. PwC analysis also suggests increasing transparency will reduce the manipulation of earnings in order to pay less tax. . . .Reducing manipulation could have a positive impact on firms’ competitiveness, according to the preliminary findings.
Calculations by economists found the reporting was unlikely to hurt banks’ ability to access capital markets, where long-term finance can be raised.”
Just as we have always argued. Slowly, the critics are being won over.