Tax Book 2023

Ethics in Tax Laws Chapter- 02

that may impair objectivity. It is impracticable to define and prescribe all such situations.

Relationships that bias or unduly influence the professional judgment of the tax

practitioners should be avoided.

(iii) Professional competence and due care. The principle of professional competence and

due care imposes the following obligations on tax practitioners;

(a) To maintain professional knowledge and skill at such a level that clients or employer

receives a competent professional service; and

(b) To act diligently and in accordance with applicable technical and professional

standards, when providing professional services.

Competent professional service requires the exercise of sound judgment in applying

professional knowledge and skill in the performance of such service. Professional

competence may be divided into two separate phases;

(a) Attainment of professional competence; and

(b) Maintenance of professional competence.

(iv) Confidentiality. The principle of confidentiality imposes an obligation on all tax

practitioners to refrain from:

(a) Disclosing to third parties the client’s business confidential information acquired as a

result of professional and business relationships without proper and specific

authority or unless there is a legal or professional right or duty to disclose, and

(b) Using confidential information acquired as a result of professional and business

relationships should to their personal advantage or the advantage of third parties.

A tax practitioner should maintain confidentiality even in a social environment. The tax

practitioner should be alert to the possibility of inadvertent disclosure, particularly in

circumstances involving long association with a business associate or a close or

“immediate family” member.

(v) Professional behavior. The principle of professional behavior imposes an obligation on

all tax practitioners to comply with relevant laws and regulations and avoid any action that

may bring discredit to the profession. This includes actions which a reasonable and

informed third party, having knowledge of all relevant information, would conclude

negativity affects the good reputation of the profession.

5. ETHICS FOR TAX PAYERS

5.1 Three approaches of tax compliance

There are three approaches to ethics for tax compliance which are as under:

 Utilitarianism is a theory in normative ethics holding that the proper course of action is

the one that maximizes utility, usually defined as maximizing total benefit and reducing

suffering or the negatives. In simple words, it is the way one helps himself in the art of

decision-making.

 Deontology, It is described as "duty" or "obligation" or "rule"-based ethics, because rules

"bind you to your duty."[

 Virtue ethics focus less on lying in any particular instance and instead consider what a

decision to tell a lie or not tell a lie said about one's character and moral behavior. As

such, the morality of lying would be determined on a case-by-case basis, which would be

based on factors such as personal benefit, group benefit, and intentions.