Good Tax Governance and Transparency: A Matter of Ethical Motivation

17 Pages Posted: 18 May 2016

See all articles by Hans Gribnau

Hans Gribnau

Tilburg Law School; Leiden University

Ave-Geidi Jallai

Tax Law Department, Tilburg Law School, Tilburg University

Date Written: May 17, 2016


Multinationals’ tax practices are the subject of much discussion nowadays. The media has been reporting stories about tax avoidance and/or companies not paying their “fair share” of taxes. Thus, multinational enterprises are currently in the eye of the storm. Their allegedly aggressive tax planning practices have led to public outcry. Politicians have shared this public sentiment, sometimes even accusing these multinationals of “immoral” behaviour. There are no clear signs that the storm will calm soon. What should multinationals do?

The current debate clearly calls for ethical reflection. It appears that there is something inherent in tax planning that is not covered by the traditional legal distinction between (illegal) corporate tax evasion and tax avoidance. Aggressive tax planning is not discussed in terms of legal or illegal behaviour, but in moral terms. This development demands that multinational enterprises reflect on their tax planning strategy – not only in economic and legal terms, but also in ethical terms. Therefore, this article addresses the relationship between society, morality and taxes. Morality regards the behaviour of individuals, but does it also concern the behaviour of businesses? Furthermore, the concept of tax planning is elaborated on, and we will show that the concepts “aggressive tax planning”, “tax evasion” and “tax avoidance” represent different relationships between law and morality. Taxes are a cost item, but aggressive tax planning may also imply certain costs. Reputation damage, for example, may involve considerable costs. It will be argued that in order to improve corporate reputation, corporate social responsibility (CSR) is a helpful tool.

Could (moral) leadership be shown by including tax in a business’ CSR strategy? Moreover, does the ethical obligation to go beyond what is required by the law – key to CSR companies – encompass transparency? Good tax governance should enhance accountability and transparency, thus diminishing information asymmetry. In this regard, we propose to make a distinction between an intrinsic motivation to do the right thing (with a favourable reputation as an upshot) and extrinsic motivation (such as concern for favourable reputation in order to boost shareholder value).

Keywords: tax planning, multinationals, good tax governance, transparency, corporate social responsibility, CSR, Carroll

Suggested Citation

Gribnau, Hans and Jallai, Ave-Geidi, Good Tax Governance and Transparency: A Matter of Ethical Motivation (May 17, 2016). Tilburg Law School Research Paper No. 06/2016, Available at SSRN: or

Hans Gribnau (Contact Author)

Tilburg Law School ( email )

Tilburg, 5000 LE

Leiden University ( email )

P.O. Box 9520
2300 RA Leiden, NL-2300RA

Ave-Geidi Jallai

Tax Law Department, Tilburg Law School, Tilburg University ( email )

Tilburg, 5000 LE

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