Corporate Tax Avoidance - The Problem of Aggressive Tax Planning

58 Pages Posted: 7 Feb 2018 Last revised: 1 Jun 2018

See all articles by Martin Petrin

Martin Petrin

University College London - Faculty of Laws

Date Written: January 1, 2018


This paper explores the complexities of corporate tax policy and (legal) tax avoidance by businesses. It first examines justifications for the existence of a corporate tax and shows that different theoretical conceptualizations of the corporate entity surface in the major rationales used to justify treating corporations as taxable subjects. Next, the paper discusses the problem of aggressive tax planning, including its mechanics, effects, the role of governments, and regulatory frameworks and initiatives in this area. Finally, the paper answers the question whether there is a corporate (fiduciary) duty not to engage in aggressive tax planning. It concludes that while there is normally no legal duty to this effect, there is an extra-legal obligation not to utilize aggressive tax planning techniques based on the benefit principle and corporations’ status as consumers of public goods and services. From this perspective, tax avoidance contributes to corporate free riding on publicly financed infrastructure.

Keywords: Corporate Tax Avoidance, Aggressive Tax Planning, Profit Shifting, BEPS, Fiduciary Duties, Boards, Benefit Principle

JEL Classification: K20, G34

Suggested Citation

Petrin, Martin, Corporate Tax Avoidance - The Problem of Aggressive Tax Planning (January 1, 2018). Available at SSRN: or

Martin Petrin (Contact Author)

University College London - Faculty of Laws ( email )

London WC1E OEG
United Kingdom

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