Corporate tax avoidance: is tax transparency the solution?

Lynne Oats*, Penelope Tuck

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

32 Citations (Scopus)
317 Downloads (Pure)

Abstract

Corporate tax avoidance has been a matter of considerable public attention, particularly since the 2008 global financial crisis. The nature of calls for tax reform and increased regulation, advocated most prominently by tax activists and NGOs, has revolved around transparency as a possible corrective to unacceptable tax avoidance, although there is no consensus as to what the term tax avoidance encompasses and when it becomes unacceptable. We examine two responses to calls for increased transparency about the tax affairs of multinational entities: firstly, country by country reporting that provides information to tax authorities, and secondly the UK requirement for publication of tax strategies, whereby large companies put information into the public domain. We find considerable misunderstanding about the benefits of transparency in this setting. By failing to consider the limits of transparency initiatives there is a risk of dysfunctional consequences, for example additional costs in providing and processing additional information, the prospect of increased disputes as new information generates new misinterpretations and uncertainty in determining the final tax position. There is a risk that greater disclosure will not effectively address concerns about unacceptable corporate tax avoidance.

Original languageEnglish
Pages (from-to)565-583
Number of pages19
JournalAccounting and Business Research
Volume49
Issue number5
Early online date1 Jun 2019
DOIs
Publication statusPublished - 29 Jul 2019

Bibliographical note

Funding Information:
Lynne Oats gratefully acknowledges the financial support of the Economic and Social Research Council [grant reference ES/S00713X/1].

Publisher Copyright:
© 2019, © 2019 Informa UK Limited, trading as Taylor & Francis Group.

Keywords

  • tax avoidance
  • tax transparency
  • country by country reporting
  • tax strategy

ASJC Scopus subject areas

  • Accounting
  • Finance

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