Abstract

http://ssrn.com/abstract=2069214
 


 



Responsible Tax as Corporate Social Responsibility: The Case of Multinational Enterprises and Effective Tax in India


Alan Muller


University of Amsterdam Business School; University of Washington - Michael G. Foster School of Business

Ans Kolk


University of Amsterdam Business School

May 28, 2012

Business and Society, Forthcoming

Abstract:     
Anecdotal evidence often suggests that multinational enterprises (MNEs) operating in developing countries “exploit their multinationality” to avoid paying taxes to host governments. This article explores the concept of “responsible tax” as a corporate social responsibility (CSR) issue for MNEs, based on the notion that MNEs face considerable variation in the extent, monitoring, and application of tax laws internationally. This variation creates a “moral free space” as to which tax payments to make. Using firm-level data from three important sectors in India, the authors explore whether foreign MNE subsidiaries pay higher taxes than local firms, and whether, in the case of MNEs, there are differences between subsidiaries of MNEs with and without a reputation for CSR. The results for India show that MNEs pay considerably higher effective tax rates than do local firms, and MNE subsidiaries known for CSR pay more tax than do MNE subsidiaries less known for CSR. This set of findings suggests that MNEs operating in India see taxation in developing countries in relation to CSR.

Number of Pages in PDF File: 41

Keywords: corporate social responsibility, taxation, developing countries, multinational enterprises, local companies, India

JEL Classification: D21, E62, F23, H25, H26, H71, K34, L1, L2, M14, M4

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Date posted: May 28, 2012  

Suggested Citation

Muller, Alan and Kolk, Ans, Responsible Tax as Corporate Social Responsibility: The Case of Multinational Enterprises and Effective Tax in India (May 28, 2012). Business and Society, Forthcoming. Available at SSRN: http://ssrn.com/abstract=2069214

Contact Information

Alan R. Muller
University of Amsterdam Business School ( email )
Plantage Muidergracht 12
Amsterdam, 1018TV
Netherlands
HOME PAGE: http://www1.fee.uva.nl/pp/amuller
University of Washington - Michael G. Foster School of Business ( email )
Box 353200
Seattle, WA 98195-3200
United States
Ans Kolk (Contact Author)
University of Amsterdam Business School ( email )
Roetersstraat 18
Amsterdam, 1018WB
Netherlands
+31 20 525 4289 (Phone)
+31 20 525 5281 (Fax)
HOME PAGE: http://www.anskolk.nl
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