Is Aggressive Tax Planning Socially Irresponsible?

Abstract:

In this article, the link between Corporate Social Responsibility (CSR) and aggressive tax planning was considered, in the backdrop of recent parliamentary hearings and investigations over the aggressive tax planning of multinationals. It was questioned whether companies that engage in aggressive tax planning are indeed socially irresponsible. It was argued that it was a slippery slope for a country to expect to raise or increase corporate tax revenues from CSR. The international tax system is all about choices. A company should not be deemed socially irresponsible for benefitting from certain choices if those choices are available and there are no rules against them. It was, however, recognized that while it might be difficult to justify how the payment of full (or higher) taxes is a significant act of social responsibility, there could be business reasons for avoiding aggressive tax planning. Therefore, notwithstanding the lack of conclusive evidence on the point and the author’s belief that CSR should play no role on how a company conducts its tax affairs, it was conceded that CSR implications are likely to become very important in the whole debate.