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Corporate social responsibility and tax avoidance: A comment and reflection

Author

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  • John Hasseldine
  • Gregory Morris

Abstract

This paper is a response to Sikka’s ‘Smoke and Mirrors: Corporate Social Responsibility and Tax Avoidance’. We believe that ‘Smoke and Mirrors’ (hereafter S&M) identifies an area of considerable importance but that it is misleading and problematic for several reasons. First, it glosses over the important distinction between tax avoidance and tax evasion. Despite using the term ‘tax avoidance’ in the title, to establish its conclusion, the paper relies predominantly on a handful of examples involving fraud, deceit and corruption, which are behaviors usually associated with ‘tax evasion’. In the context of corporate social responsibility, we explain why this distinction is crucial and offer directions for future research in this area. Second, Sikka’s paper ignores voluminous extant research on tax compliance, corporate tax avoidance and its relationship with CSR. Third, the paper mis-reports key statistics on the tax gap in the UK and US, and finally, it omits a robust discussion of the considerable policy response to corporate tax avoidance, which has been promoted by numerous tax agencies and international organizations such as the OECD. In the current paper, while recognizing the merits of S&M, we highlight the problems listed above, seek to remedy them, identify additional areas of concern and encourage further research attention in this area.

Suggested Citation

  • John Hasseldine & Gregory Morris, 2013. "Corporate social responsibility and tax avoidance: A comment and reflection," Accounting Forum, Taylor & Francis Journals, vol. 37(1), pages 1-14, March.
  • Handle: RePEc:taf:accfor:v:37:y:2013:i:1:p:1-14
    DOI: 10.1016/j.accfor.2012.05.001
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    Citations

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    Cited by:

    1. Sikka, Prem, 2013. "Smoke and mirrors: Corporate social responsibility and tax avoidance—A reply to Hasseldine and Morris," Accounting forum, Elsevier, vol. 37(1), pages 15-28.
    2. Anesa, Mattia & Bressan, Alessandro, 2024. "SMEs tax minimization as shared responsibility," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 98(C).
    3. Roman Lanis & Grant Richardson, 2015. "Is Corporate Social Responsibility Performance Associated with Tax Avoidance?," Journal of Business Ethics, Springer, vol. 127(2), pages 439-457, March.
    4. Brooks, Chris & Godfrey, Chris & Hillenbrand, Carola & Money, Kevin, 2016. "Do investors care about corporate taxes?," Journal of Corporate Finance, Elsevier, vol. 38(C), pages 218-248.
    5. Siglé, Maarten & Goslinga, Sjoerd & Speklé, Roland & van der Hel, Lisette & Veldhuizen, Robbert, 2018. "Corporate tax compliance: Is a change towards trust-based tax strategies justified?," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 32(C), pages 3-16.
    6. Argilés-Bosch, Josep M. & Somoza, Antonio & Ravenda, Diego & García-Blandón, Josep, 2020. "An empirical examination of the influence of e-commerce on tax avoidance in Europe," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 41(C).
    7. Robert Bird & Karie Davis-Nozemack, 2018. "Tax Avoidance as a Sustainability Problem," Journal of Business Ethics, Springer, vol. 151(4), pages 1009-1025, September.
    8. Carola Hillenbrand & Kevin Guy Money & Chris Brooks & Nicole Tovstiga, 2019. "Corporate Tax: What Do Stakeholders Expect?," Journal of Business Ethics, Springer, vol. 158(2), pages 403-426, August.
    9. Antonetti, Paolo & Anesa, Mattia, 2017. "Consumer reactions to corporate tax strategies: The role of political ideology," Journal of Business Research, Elsevier, vol. 74(C), pages 1-10.
    10. Kay Blaufus & Jakob Reineke & Ilko Trenn, 2023. "Perceived tax audit aggressiveness, tax control frameworks and tax planning: an empirical analysis," Journal of Business Economics, Springer, vol. 93(3), pages 509-557, April.
    11. Ylönen, Matti & Laine, Matias, 2015. "For logistical reasons only? A case study of tax planning and corporate social responsibility reporting," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 33(C), pages 5-23.
    12. Gunn, Anna F. & Koch, Dirk-Jan & Weyzig, Francis, 2020. "A methodology to measure the quality of tax avoidance case studies: Findings from the Netherlands," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 39(C).
    13. Quentin Clair, 2019. "Acceptable levels of tax risk as a metric of corporate tax responsibility: theory, and a survey of practice," Nordic Tax Journal, Sciendo, vol. 2019(1), pages 1-15, January.
    14. Kumari Juddoo & Issam Malki & Sudha Mathew & Sheeja Sivaprasad, 2023. "An impact investment strategy," Review of Quantitative Finance and Accounting, Springer, vol. 61(1), pages 177-211, July.
    15. Nirmala Devi Mohanadas, 2019. "A Theoretical Review on Corporate Tax Avoidance: Shareholder Approach versus Stakeholder Approach," GATR Journals jfbr160, Global Academy of Training and Research (GATR) Enterprise.
    16. Dov Fischer & Hershey H. Friedman, 2019. "Tone-at-the-Top Lessons from Abrahamic Justice," Journal of Business Ethics, Springer, vol. 156(1), pages 209-225, April.
    17. AnnMarie Bennett & Breda Murphy, 2017. "The Tax Profession: Tax Avoidance and the Public Interest," Economics Department Working Paper Series n286-17.pdf, Department of Economics, National University of Ireland - Maynooth.
    18. Fallan, Even & Fallan, Lars, 2019. "Corporate tax behaviour and environmental disclosure: Strategic trade-offs across elements of CSR?," Scandinavian Journal of Management, Elsevier, vol. 35(3).

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