Restoring Stakeholders’ Trust in Multinationals’ Tax Planning Practices with Corporate Social Responsibility (CSR)

Book chapter (pp. 173-201) in: Peeters, B., Gribnau, J.L.M. and Badisco, J. (Eds). 'Rebuilding Trust in Taxation'. Cambridge: Intersentia

30 Pages Posted: 9 Jan 2018 Last revised: 16 Jan 2018

See all articles by Ave-Geidi Jallai

Ave-Geidi Jallai

Tax Law Department, Tilburg Law School, Tilburg University

Date Written: February 28, 2017

Abstract

This contribution discusses the tax planning behaviour of big corporations and investigates Corporate Social Responsibility (CSR) as a tool to battle the issue. It will be argued that certain legal tax planning strategies of multinationals are not acceptable to local communities and the public in general. If this unacceptability line is crossed, stakeholders might lose trust in a company. This, in turn, can cause reputation damage and various related costs for multinationals. Therefore, multinationals should, as it will be argued, think about possibilities for (re-)building stakeholder trust in a company.

Trust is based on a belief that a company makes solid moral decisions that do not harm the other party. Therefore, companies should make solid moral decisions that do not harm stakeholders also when it comes to their tax planning strategies. But how to do that? It will be suggested that they look at CSR for help. As will be argued, with CSR corporations can prove that their decision-making considers in addition to economic and legal values also society and its moral values as a whole. For applying CSR in tax planning practices, both procedural and substantive elements will be proposed. From the procedural perspective, companies should be more transparent about their strategies, and from the substantive side, good tax governance should take into account ethical considerations. Thus, ethically sound decision-making reflects the behaviour of a trustworthy company and should, therefore, help to reinforce stakeholders' trust.

Keywords: tax planning, aggressive tax planning, CSR, trust, moral decision-making, multinaitonals

Suggested Citation

Jallai, Ave-Geidi, Restoring Stakeholders’ Trust in Multinationals’ Tax Planning Practices with Corporate Social Responsibility (CSR) (February 28, 2017). Book chapter (pp. 173-201) in: Peeters, B., Gribnau, J.L.M. and Badisco, J. (Eds). 'Rebuilding Trust in Taxation'. Cambridge: Intersentia. Available at SSRN: https://ssrn.com/abstract=3096961

Ave-Geidi Jallai (Contact Author)

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

Tilburg, 5000 LE
Netherlands

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