Abstract
In recent times, corporations have been scrutinized for their tax behavior. Various groups of stakeholders have expressed their concern over certain corporate tax strategies that allow multinationals to pay ridiculous amounts of tax in the countries where they operate. Although national governments and international institutions are developing initiatives to reform tax rules to ensure that companies pay their fair share of tax, the international tax framework still offers MNEs several opportunities for minimizing their tax burden. In order to help businesses self-regulate their behavior in those “gray areas” where the tax law is imperfect and to drive changes in legislation, corporate taxation has recently been included in the business ethics field. In other words, the ethical responsibilities associated with corporate taxation have started to be investigated and companies are increasingly expected to exhibit a morally responsible approach to tax planning, above and beyond compliance with the letter of the law. The purpose of this chapter is to present a systematic review of literature dealing with the ethical issues associated with corporate taxation. A better understanding of the evolution, the scope and the state of the art of this academic debate is provided by the literature review. Three main topics will be critically discussed: the ethics of tax evasion, the ethics of tax avoidance and the ethics of tax practitioners. Finally, suggestions and future research paths will be offered, in order to encourage studies to foster the debate on the ethics of corporate taxation.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Similar content being viewed by others
References
Addison S, Mueller F (2015) The dark side of professions: the big four and tax avoidance. Account Audit Account J 28:1263–1290. https://doi.org/10.1108/AAAJ-01-2015-1943
∗Aharony J, Geva A (2003) Moral implications of law in business: a case of tax loopholes. Bus Ethics 12:378–393. https://doi.org/10.1111/1467-8608.00339
Allingham MG, Sandmo A (1972) Income tax evasion: a theoretical analysis. J Public Econ 1:323–338. https://doi.org/10.1016/0047-2727(72)90010-2
∗Alm J, Torgler B (2011) Do ethics matter? Tax compliance and morality. J Bus Ethics 101:635–651. https://doi.org/10.1007/s10551-011-0761-9
∗Anesa M, Gillespie N, Spee AP, Sadiq K (2019) The legitimation of corporate tax minimization. Acc Organ Soc 75:17–39. https://doi.org/10.1016/j.aos.2018.10.004
∗Apostol O, Pop A (2019) ‘Paying taxes is losing money’: a qualitative study on institutional logics in the tax consultancy field in Romania. Crit Perspect Account 58:1–23. https://doi.org/10.1016/j.cpa.2018.05.001
Audi R (2012) Virtue ethics as a resource in business. Bus Ethics Q 22:273–291. https://doi.org/10.5840/beq201222220
∗Avi-Yonah RS (2014) Corporate taxation and corporate social responsibility. N Y Univ J Law Bus 11:1–29. Available at https://repository.law.umich.edu/articles/1407
Avi-Yonah RS (2006) The three goals of taxation. Tax L Rev 60:1–28. Available at https://repository.law.umich.edu/cgi/viewcontent.cgi?article=1039&context=articles
∗Bagus P, Block W, Eabrasu M et al (2011) The ethics of tax evasion. Bus Soc Rev 116:375–401. https://doi.org/10.1111/j.1467-8594.2011.00390.x
∗Barker WB (2009) The ideology of tax avoidance. Loy Univ Chic Law J 40:229–251. Available at http://lawecommons.luc.edu/luclj/vol40/iss2/3
Beloe S, Lye G, Murphy R, Whiting J, Symons S, Woodward J (2008) Taxing issues – responsible business and tax. Available at https://sustainability.com/wp-content/uploads/2016/09/sustainability_taxing_issues.pdf
∗Bennett AM, Murphy B (2017) The tax profession: tax avoidance and the public interest. Working paper. Available at https://ideas.repec.org/p/may/mayecw/n286-17.pdf.html
Bentham J (1789/1996) The collected works of Jeremy Bentham: introduction to the principles of morals and legislation. Oxford University Press, Oxford
∗Blaufus K, Hundsdoerfer J, Jacob M, Sünwoldt M (2016) Does legality matter? The case of tax avoidance and evasion. J Econ Behav Organ 127:182–206. https://doi.org/10.1016/j.jebo.2016.04.002
∗Carminati L (2019) Between ethics and law: TNCs’ behaviour in modern economic globalisation. Soc Bus Rev 14:2–11. https://doi.org/10.1108/SBR-04-2018-0032
Carroll AB (1991) The pyramid of corporate social responsibility: toward the moral management of organizational stakeholders. Bus Horiz 34:39–48. https://doi.org/10.1016/0007-6813(91)90005-G
∗Carter C, Spence C, Muzio D (2015) Scoping an agenda for future research into the professions. Account Audit Account J 28:1198–1216. https://doi.org/10.1108/AAAJ-09-2015-2235
Chen S, Schuchard K, Stomberg B (2019) Media coverage of corporate taxes. Account Rev 94:83–116. https://doi.org/10.2308/accr-52342
∗Christensen J, Murphy R (2004) The social irresponsibility of corporate tax avoidance: taking CSR to the bottom line. Development 47:37–44. https://doi.org/10.1057/palgrave.development.1100066
∗Col B, Patel S (2019) Going to haven? Corporate social responsibility and tax avoidance. J Bus Ethics 154:1033–1050. https://doi.org/10.1007/s10551-016-3393-2
Cressey DR (1953) Other people’s money: the social psychology of embezzlement. The Free Press, New York
∗Cruz CA, Shafer WE, Strawser JR (2000) A multidimensional analysis of tax practitioners’ ethical judgments. J Bus Ethics 24:223–244. https://doi.org/10.1023/A:1006140809998
Dallyn S (2017) An examination of the political salience of corporate tax avoidance: A case study of the Tax Justice Network. Account Forum 41:336–352. https://doi.org/10.1016/j.accfor.2016.12.002
∗Darcy S (2017) ‘The elephant in the room’: corporate tax avoidance & business and human rights. Bus Hum Rights J 2:1–30. https://doi.org/10.1017/bhj.2016.23
∗Davis AK, Guenther DA, Krull LK, Williams BM (2016) Do socially responsible firms pay more taxes? Account Rev 91:47–68. https://doi.org/10.2308/accr-51224
∗De Colle S, Bennett AM (2014) State-induced, strategic, or toxic? An ethical analysis of tax avoidance practices. Bus Prof Ethics J 33:53–82. https://doi.org/10.5840/bpej201451
∗Demirbag M, Frecknall-Hughes J, Glaister KW, Tatoglu E (2013) Ethics and taxation: a cross-national comparison of UK and Turkish firms. Int Bus Rev 22:100–111. https://doi.org/10.1016/j.ibusrev.2012.02.007
∗DeZoort FT, Pollard TJ, Schnee EJ (2018) A study of perceived ethicality of low corporate effective tax rates. Account Horiz 32:87–104. https://doi.org/10.2308/acch-51935
Dodge JM (2004) Theories of tax justice: ruminations on the benefit, partnership, and ability-to-pay principles. Tax Law Rev 58:399–461
Donaldson T, Dunfee TW (1994) Toward a unified conception of business ethics: integrative social contracts theory. Acad Manag Rev 19:252–284. https://doi.org/10.5465/AMR.1994.9410210749
Donaldson T, Dunfee TW (1999) Ties that bind: a social contracts approach to business ethics. Harvard Business School Press, Cambridge MA
∗Dowling GR (2014) The curious case of corporate tax avoidance: is it socially irresponsible? J Bus Ethics 124:173–184. https://doi.org/10.1007/s10551-013-1862-4
∗Doyle E, Frecknall-Hughes J, Glaister KW (2009) Linking ethics and risk Management in taxation: evidence from an exploratory study in Ireland and the UK. J Bus Ethics 86:177–198. https://doi.org/10.1007/s10551-008-9842-9
∗Doyle E, Frecknall-Hughes J, Summers B (2014) Ethics in tax practice: a study of the effect of practitioner firm size. J Bus Ethics 122:623–641. https://doi.org/10.1007/s10551-013-1780-5
∗Fallan E, Fallan L (2019) Corporate tax behaviour and environmental disclosure: strategic trade-offs across elements of CSR? Scand J Manag 35:101042. https://doi.org/10.1016/j.scaman.2019.02.001
∗Fatemi D, Hasseldine J, Hite P (2018) The influence of ethical codes of conduct on professionalism in tax practice. J Bus Ethics. https://doi.org/10.1007/s10551-018-4081-1
∗Field HM (2017) Aggressive tax planning & the ethical tax lawyer. Va Tax Rev 36:261–321. Available at: https://repository.uchastings.edu/faculty_scholarship/1561
Finn DW, Chonko LB, Hunt SD (1988) Ethical problems in public accounting: the view from the top. J Bus Ethics 7:605–615. https://doi.org/10.1007/BF00382793
∗Fischer D, Friedman HH (2019) Tone-at-the-top lessons from Abrahamic justice. J Bus Ethics 156:209–225. https://doi.org/10.1007/s10551-017-3581-8
∗Fisher JM (2014) Fairer shores: tax havens, tax avoidance, and corporate social responsibility. Boston U Law Rev 94:337–365
∗Frecknall-Hughes J, Moizer P, Doyle E, Summers B (2017) An examination of ethical influences on the work of tax practitioners. J Bus Ethics 146:729–745. https://doi.org/10.1007/s10551-016-3037-6
Friedman M (1970) The social responsibility of business is to increase its profits. New York Times Magazine, September 13, 32–33
Global Reporting Initiative (GRI) (2019) GRI 207: Tax. Available at https://www.globalreporting.org/standards/gri-standards-download-center/gri-207-tax-2019/
∗Godar SH, O’Connor PJ, Taylor VA (2005) Evaluating the ethics of inversion. J Bus Ethics 61:1–6. https://doi.org/10.1007/s10551-005-1176-2
∗Gribnau H (2015) Corporate social responsibility and tax planning: not by rules alone. Soc Legal Stud 24:225–250. https://doi.org/10.1177/0964663915575053
∗Gribnau H (2017) Voluntary compliance beyond the letter of the law: reciprocity and fair play. In: Peeters B, Gribnau H, Badisco J (eds) Rebuilding trust in taxation. Intersentia, Antwerp, pp 17–50
∗Gribnau H, Jallai A-G (2017) Good tax governance: a matter of moral responsibility and transparency. Nord Tax J 2017:70–88. https://doi.org/10.1515/ntaxj-2017-0005
∗Hansen DR, Crosser RL, Laufer D (1992) Moral ethics v. tax ethics: the case of transfer pricing among multinational corporations. J Bus Ethics 11:679–686. https://doi.org/10.1007/BF01686348
Hardeck I, Hertl R (2014) Consumer reactions to corporate tax strategies: effects on corporate reputation and purchasing behavior. J Bus Ethics 123:309–326. https://doi.org/10.1007/s10551-013-1843-7
Hardeck I, Harden JW, Upton DR (2019) Consumer reactions to tax avoidance: evidence from the United States and Germany. J Bus Ethics. https://doi.org/10.1007/s10551-019-04292-8
Honoré T (1993) The dependence of morality on law. Oxf J Leg Stud 13:1–17. https://doi.org/10.1093/ojls/13.1.1
Hursthouse R, Pettigrove G (2016) Virtue ethics. In: Stanford encyclopedia of philosophy. Available at. https://plato.stanford.edu/entries/ethics-virtue/
Institute of Business Ethics (IBE) (2013) Tax Avoidance as an Ethical Issue for Business. Available at https://www.ibe.org.uk/resource/tax-avoidance-as-an-ethical-issue-for-business.html
International Bar Association (2013) Tax abuses, poverty and human rights. Available at https://www.ibanet.org/Article/NewDetail.aspx?ArticleUid=4A0CF930-A0D1-4784-8D09-F588DCDDFEA4
Johnson R, Cureton A (2004) Kant’s moral philosophy. In: Stanford encyclopedia of philosophy. Available at https://plato.stanford.edu/entries/ethics-virtue/
Kanagaretnam K, Lee J, Lim CY, Lobo GJ (2018) Cross-country evidence on the role of independent media in constraining corporate tax aggressiveness. J Bus Ethics 150:879–902. https://doi.org/10.1007/s10551-016-3168-9
Kant I (1786/2012) Groundwork of the metaphysics of morals. Cambridge University Press, Cambridge
Kant I (1797/2013) The metaphysics of morals. Cambridge University Press, Cambridge
Kaufman NH (1997) Fairness and the taxation of international income. Law Policy Int Bus 29:145
Killian S (2006) Where’s the harm in tax competition? Crit Perspect Account 17:1067–1087. https://doi.org/10.1016/j.cpa.2005.08.010
∗Kirchler E, Maciejovsky B, Schneider F (2003) Everyday representations of tax avoidance, tax evasion, and tax flight: do legal differences matter? J Econ Psychol 24:535–553. https://doi.org/10.1016/S0167-4870(02)00164-2
∗Krupka J (2019) Recommitment to advancing tax ethics. J Account Ethics Public Pol 20:1–29
∗Lanis R, Richardson G (2012) Corporate social responsibility and tax aggressiveness: a test of legitimacy theory. Account Audit Account J 26:75–100. https://doi.org/10.1108/09513571311285621
∗Lenz H (2018) Aggressive tax avoidance by managers of multinational companies as a violation of their moral duty to obey the law: a Kantian rationale. J Bus Ethics. https://doi.org/10.1007/s10551-018-4087-8
∗Machan TR (2012) Taxation: the ethics of its avoidance or dodging. In: McGee RW (ed) The ethics of tax evasion. Springer New York, New York, pp 73–82
∗Maciejovsky B, Schwarzenberger H, Kirchler E (2012) Rationality versus emotions: the case of tax ethics and compliance. J Bus Ethics 109:339–350. https://doi.org/10.1007/s10551-011-1132-2
∗Marshall RL, Armstrong RW, Smith M (1998) The ethical environment of tax practitioners: Western Australian evidence. J Bus Ethics 17:1265–1279. https://doi.org/10.1023/A:1005721505618
Massaro M, Dumay J, Guthrie J (2016) On the shoulders of giants: undertaking a structured literature review in accounting. Account Audit Account J 29:767–801. https://doi.org/10.1108/AAAJ-01-2015-1939
∗McGee RW (2006) Three views on the ethics of tax evasion. J Bus Ethics 67:15–35. https://doi.org/10.1007/s10551-006-9002-z
∗McGee RW (2010) Ethical issues in transfer pricing. Manch J Int Econ Law 7:24–41
∗McGee RW (2012) Four views on the ethics of tax evasion. In: McGee RW (ed) The ethics of tax evasion. Springer New York, New York, pp 3–33
∗McMahon CP, Corcelius A, Smith B (2013) International transfer pricing. J Account Ethics Public Pol 14:59–75
∗Mehafdi M (2000) The ethics of international transfer pricing. J Bus Ethics 28:365–381. https://doi.org/10.1023/A:1006353027052
∗Mickiewicz T, Rebmann A, Sauka A (2019) To pay or not to pay? Business owners’ tax morale: testing a neo-institutional framework in a transition environment. J Bus Ethics 157:75–93. https://doi.org/10.1007/s10551-017-3623-2
Mill JS (1863/1998) Utilitarianism. Oxford University Press, Oxford
Nozick R (1974) Anarchy, state and utopia. The World Bank, Washington
∗Ostas DT (2018) Ethics of tax interpretation. J Bus Ethics. https://doi.org/10.1007/s10551-018-4088-7
∗Ostas DT, Hilling A (2016) Global tax shelters, the ethics of interpretation, and the need for a pragmatic jurisprudence: global tax shelters. Am Bus Law J 53:745–785. https://doi.org/10.1111/ablj.12088
∗Payne DM, Raiborn CA (2018) Aggressive tax avoidance: a conundrum for stakeholders, governments, and morality. J Bus Ethics 147:469–487. https://doi.org/10.1007/s10551-015-2978-5
∗Prebble Z, Prebble J (2010) The morality of tax avoidance. Creighton Law Rev 43:693–746
∗Preuss L (2012a) Corporate tax avoidance: an ethical evaluation. In: Haynes K, Murray A, Dillard J (eds) Corporate social responsibility: a research handbook. Routledge, New York, pp 112–122
∗Preuss L (2012b) Responsibility in paradise? The adoption of CSR tools by companies domiciled in tax havens. J Bus Ethics 110:1–14. https://doi.org/10.1007/s10551-012-1456-6
∗Radcliffe VS, Spence C, Stein M, Wilkinson B (2018) Professional repositioning during times of institutional change: the case of tax practitioners and changing moral boundaries. Acc Organ Soc 66:45–59. https://doi.org/10.1016/j.aos.2017.12.001
∗Raiborn CA, Massoud MF, Payne DM (2015) Tax avoidance: the good, the bad, and the future. J Bus Manag 21:77–94
Rawls J (1971) A theory of justice. Belknap Press, Cambridge
∗Sakurai Y, Braithwaite V (2003) Taxpayers’ perceptions of practitioners: finding one who is effective and does the right thing? J Bus Ethics 46:375–387. https://doi.org/10.1023/A:1025641518700
∗Scheffer D (2013) The ethical imperative of curbing corporate tax avoidance. Ethics Int Aff 27:361–369. https://doi.org/10.1017/S0892679413000324
∗Shafer WE, Simmons RS (2008) Social responsibility, Machiavellianism and tax avoidance: a study of Hong Kong tax professionals. Account Audit Account J 21:695–720. https://doi.org/10.1108/09513570810872978
∗Shafer WE, Simmons RS (2011) Effects of organizational ethical culture on the ethical decisions of tax practitioners in mainland China. Account Audit Account J 24:647–668. https://doi.org/10.1108/09513571111139139
∗Shafer WE, Simmons RS, Yip RWY (2016) Social responsibility, professional commitment and tax fraud. Account Audit Account J 29:111–134. https://doi.org/10.1108/AAAJ-03-2014-1620
Sikka P (2008) Enterprise culture and accountancy firms: new masters of the universe. Account Audit Account J 21:268–295. https://doi.org/10.1108/09513570810854437
∗Sikka P (2010) Smoke and mirrors: corporate social responsibility and tax avoidance. Account Forum 34:153–168. https://doi.org/10.1016/j.accfor.2010.05.002
∗Sikka P, Hampton MP (2005) The role of accountancy firms in tax avoidance: some evidence and issues. Account Forum 29:325–343. https://doi.org/10.1016/j.accfor.2005.03.008
Srinivasan TN (1973) Tax evasion: a model. J Public Econ 2:339–346. https://doi.org/10.1016/0047-2727(73)90024-8
∗Stainer A, Stainer L, Segal A (1997) The ethics of tax planning. Bus Ethics 6:213–219. https://doi.org/10.1111/1467-8608.00072
∗Stuebs M, Wilkinson B (2010) Ethics and the tax profession: restoring the public interest focus. Account Pub Int 10:13–35. https://doi.org/10.2308/api.2010.10.1.13
Torgler B, Schneider F (2009) The impact of tax morale and institutional quality on the shadow economy. J Econ Psychol 30:228–245 https://doi.org/10.1016/j.joep.2008.08.004
Tranfield D, Denyer D, Smart P (2003) Towards a methodology for developing evidence-informed management knowledge by means of systematic review. Br J Manag 14:207–222. https://doi.org/10.1111/1467-8551.00375
UN Principles for Responsible Investment (2015) Engagement guidance on corporate tax responsibility. Available at https://www.unpri.org/Uploads/w/c/g/pri_taxguidance2015_550023.pdf
UN Principles for Responsible Investment (2018) Evaluating and engaging on corporate tax transparency: an investor guide. Available at https://www.unpri.org/download?ac=4668
∗West A (2018) Multinational tax avoidance: virtue ethics and the role of accountants. J Bus Ethics 153:1143–1156. https://doi.org/10.1007/s10551-016-3428-8
∗Windsor D (2017) The ethics and business diplomacy of MNE tax avoidance. In: Ruël H (ed) Advanced series in management. Emerald Publishing, Bingley, pp 151–171
∗Ylönen M, Laine M (2015) For logistical reasons only? A case study of tax planning and corporate social responsibility reporting. Crit Perspect Account 33:5–23. https://doi.org/10.1016/j.cpa.2014.12.001
Young C (2019) Putting the law in its place: business ethics and the assumption that illegal implies unethical. J Bus Ethics 160:35–51. https://doi.org/10.1007/s10551-018-3904-4
∗ = Articles included in the systematic literature review
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2020 Springer Nature Switzerland AG
About this entry
Cite this entry
Scarpa, F., Signori, S. (2020). Ethics of Corporate Taxation: A Systematic Literature Review. In: Rendtorff, J.D. (eds) Handbook of Business Legitimacy. Springer, Cham. https://doi.org/10.1007/978-3-030-14622-1_115
Download citation
DOI: https://doi.org/10.1007/978-3-030-14622-1_115
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-030-14621-4
Online ISBN: 978-3-030-14622-1
eBook Packages: Business and ManagementReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences