The GUE/NGL political group in the European Parliament just published a report looking into the secretive workings of The Big Four accountancy firms that assist individuals and companies to evade taxes.
Titled ‘The Big Four – A study of opacity’ and co-authored by Professor Richard Murphy – founder of the Tax Justice Network and director of Tax Research UK – and Saila Naomi Stausholm, PhD candidate at the Copenhagen Business School, this ‘first-ever major report’ ‘lays bare the secretive tax evasion practices of KPMG, Deloitte, EY and PricewaterhouseCoopers.
‘Some of the practices uncovered by this GUE/NGL-commissioned study include deliberately obscuring the links between their numerous offices in dozens of countries by claiming they are separate legal entities. In addition, the report identifies that The Big Four often conceal data on profits earned as well as the number of staff working in various jurisdictions globally.
Undeniably, all four accountancy firms work towards the common goal of protecting their clients from regulatory enquiries and legal risks. They also strive to hide as much of their work from outsiders as possible.
Much of the research also looked into the operations of The Big Four inside the EU and the report unearthed a number of weaknesses in the EU’s proposed new system for beating tax abuse as promoted by tax advisers.
The current proposal for an EU regulation on tax evasion would require that advisers report tax schemes that may potentially be abusive. The proposal does not, however, recognise networked firms as single entities or extend the obligations of firms in EU member states to include their network partners beyond the EU’s territorial limits. Yet, these measures are essential if the regulation is to be effective.
The GUE/NGL report also makes a number of recommendations as to how The Big Four should operate legally and fairly – especially within the EU – and what Brussels should do to clean up its act in tackling the issue of tax evasion which costs EU member states billions of euros in lost revenue per year. A complete separation of The Big Four’s auditing and tax consulting business would be a good start’.
You can read the full report here.