Corporate tax avoidance: is tax transparency the solution?

Lynne Oats, Penelope Tuck

    Research output: Contribution to journalArticlepeer-review

    8 Citations (Scopus)
    71 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
    DOIs
    Publication statusPublished - 1 Jun 2019

    Keywords

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

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