Remember the balance of forces. Immorality of international tax avoidance, corporate social activity and narrow-minded tax policymakers
| Pages | 1379-1388 |
| DOI | https://doi.org/10.1108/JFC-09-2019-0119 |
| Date | 03 February 2020 |
| Published date | 03 February 2020 |
| Author | Akira Matsuoka |
| Subject Matter | Financial crime,Accounting & Finance |
Remember the balance of forces
Immorality of international tax avoidance,
corporate social activity and narrow-minded
tax policymakers
Akira Matsuoka
School of Business Administration, Toyohashi Sozo Daigaku, Toyohashi, Japan
Abstract
Purpose –The purpose of this paper is to warn policymakers, by examining certain aspects of policy,
possibly overlooked,against overestimating the power of corporate socialresponsibility (CSR) idea to inhibit
tax avoidanceby the multinationals.
Design/methodology/approach –By examining, with narrative and qualitative means, existing
insightssuch as ones with regard to the inefficiency of the public sector.
Findings –Implication that the fo llowing t hree fact ors could n ot co-exi st: promo ting CSR ac tivitie s,
which include moral tax payment by the multinational corporations; requiring the multinationals
to refrain from immorally reducing effective tax rates and keeping the current level of public
utilities.
Originality/value –To sound an alarm to tax policymakers who are particularly addicted to the base
erosion and profit shifting by multinational enterprises recently by this new implication mixing up with
existingfindings with regard to the CSR idea and cost-inefficiency characterof the public sector activities.
Keywords CSR, international tax avoidance, Multinational corporation,
Public sector cost-inefficiency
Paper type Conceptual paper
“We are not accusing you of being illegal, we are accusing you of being immoral”(The Public
Accounts Committee, UK, 2012).
This remark is well known to international taxation experts. As the reader may know,
in 2012 Margaret Hodge, then the chair of Public Accounting Committee, addressed
these words to Matt Brittin, Google Vice President for Sales and Operations, Northern
and Central Europe at that time. She was reacting to the following argument from the
US Multinational Corporations: Basically, my corporation pays taxes thoroughly
according to what the UK Parliament defines as legal, so the corporation does not
enjoy any illegal activities to be criticized. The argument of Ms Hodge seems to try to
address the gray zone of the tax regime where corporations benefit from questionable
international tax avoidance schemes while technically still in compliance with the
law.
The address by Ms Hodge sheds light on a very important question arising from tax
avoidance activities by multinationalcorporations. That is, can society require corporations
to address the morality of tax avoidance?This topic itself was not new even when Ms Hodge
criticized the giant multinationalson moral grounds.
The author sincerely thank my family-like friends, Philip Olander, Brenda Cole, Tanya Zucconi, Mitt,
Yogi, and Affection in Massachusetts of the United States for all helpful support and comment.
Balance of
forces
1379
Journalof Financial Crime
Vol.27 No. 4, 2020
pp. 1379-1388
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-09-2019-0119
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