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Carthy to host Irish launch of new report on Big Four and tax secrecy

11 July, 2017 - by Matt Carthy MEP

Sinn Féin MEP Matt Carthy will host the Irish launch of a new report by Professor Richard Murphy and Saila Stausholm, which analyses the role of the Big Four accounting firms in facilitating tax avoidance globally and makes recommendations as to their regulation on July 18. Carthy commissioned the study together with other left MEPs on the European Parliament’s Panama Papers inquiry committee. Report co-author Saila Stausholm and Oxfam Ireland CEO Jim Clarken will speak at the event, which will be attended by tax justice activists, NGOs and academics.

The study, published last week, analyses the size, scope and location of the activities of the Big Four accounting firms –PwC, Deloitte, KPMG, and EY. It makes a number of findings including that these firms are heavily over-represented in tax havens when compared with the population size and GDP of these locations, where they make exceptional profits. The Irish state is once again identified as a tax haven, or secrecy jurisdiction, in this report.

While each firm claims to consist of networks of legally independent companies, they all in reality have central management organisations under common control. The authors of the report suggest that this structure has been adopted because it reduces the level of legal risk and scrutiny they are exposed to and ensures secrecy on the scale of their operations and the rewards flowing from them.

Mr Carthy said:

“Over the past year of our work on the Panama Papers inquiry in the European Parliament, we have examined in great detail of the role that enablers and promoters of tax avoidance and tax evasion schemes play internationally. The Big Four auditing and accounting firms are central players in this ecosystem of tax avoidance, yet they are allowed to operate in secrecy, with no measures in place to deal with obvious conflicts of interest between their provision of both auditing and tax services.

“They are crucial regulators of the global economic system – with the unique role of both regulating multinationals through their auditing role and simultaneously advising these same companies on how to abuse the legal system in order to avoid paying taxes – yet they are subject to minimal public scrutiny and regulation. This situation, and the outcomes it leads to, is entirely unacceptable. This report calls for the separation of the auditing and tax service roles of the Big Four – basically a kind of Glass-Steagall Act for these firms.

“I will be working with others in the European Parliament to ensure that these important recommendations on improving the accountability and transparency of the Big Four are taken into account when the Panama Papers inquiry produces its recommendations, and also when the Parliament considers the Commission’s current proposal around regulating enablers and promoters of tax avoidance schemes.” 

Note: Please see attached the report in question

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