Tax avoidance by corporations negatively impacts developing countries in three main ways: 1) It diminishes funds for public services and economic growth by reducing tax revenue. Developing countries lose out on large amounts needed for infrastructure and social programs. 2) By shifting profits to tax havens, corporations avoid paying their fair share and their social responsibility to the countries and societies that help them generate profits. 3) The practices undermine justice and fairness in societies by exacerbating inequality and poverty. International regulations have so far not adequately addressed this issue facing developing nations.

1. TAX AVOIDANCE AND CORPORATES
SOCIAL RESPONSIBILITY
PEOPLE AND JUSTICE
MN5001

2. INTRODUCTION
• Focusing on the effects of tax avoidance
• Corporate Social Responsibility (“CSR”)
as a tool to encourage social justice and
morality
• The problems of tax avoidance
• The implication of tax avoidance on economic growth
• Effects of tax avoidance on society within developing
countries
“More than four out of five
adults believe tax dodging
by corporates is morally
wrong” (Molina, 2015)

3. CSR OVERVIEW
• Corporate Social Responsibility
• Companies take stakeholder interests into account
• Stockholders, employees, neighbors, the environment, etc.
• Can be seen as a tool for moral/social justice
• Corporations seen as “citizens”
• Adherence to same moral codes as normal citizens
• Takes place on multiple levels
• Institutional
• Organizational
• Individual

4. MORAL BEHAVIOR
• Moral standards are often higher than legal requirements
• Moral behavior comes in steps from amoral behavior to
ethical behavior
• CSR takes place in this model and is closely tied to
morality
• CSR is conducted voluntarily
• Social pressure

5. TAX AVOIDANCE
• “Tax avoidance [...] is mostly associated with companies, rather than
individuals. It usually falls just within the limits of the law, but goes against
the spirit of the law. Using aggressive tax planning techniques, certain
companies exploit legal loopholes in tax systems and mismatches between
national rules to minimise their tax bills and avoid paying their fair share of
taxes” (European Commission, 2015)
• Especially practiced by MNCs
• Leads to distortion of
competition
(McTague , 2013)

6. INTERNATIONAL TAX COMPETITION
Average global tax rate 2000-2011
(KPMG , 2011)
• Pressure to attract foreign
direct investment leads to
continuous decrease of
tax rates
• Accumulates to an
average revenue loss
of 13 percent in
non-OECD countries

7. TAX AVOIDANCE BY ASSOCIATED
BRITISH FOOD GROUP IN ZAMBIA
• Associated British Food group
• International food, ingredients and retail
group with annual profit of £12,9bn
• Subsidiary ‘Zambia Sugar‘
• Shifts a third of pre-tax profits, £13m
a year, to tax havens
• Enough money to put 48,000 children
in school
(Country Reports, 2015)
(Specialised Training Solutions, 2013) (Mfula, 2010)

8. ECONOMIC IMPACT ON
DEVELOPING COUNTRIES
• Diminishes future potential
economic growth
• Generally a greater impact
for developing countries
• Loosing out on a large
amount of tax revenue
• Additionally due to lower tax
rates
(Oxfam International, 2013)

9. ECONOMIC IMPACT ON
DEVELOPING COUNTRIES
• Taxes help improve social services and infrastructure
• Assists in reducing poverty levels
• Helps improve living standards
• Sustainable growth is important
• BRIC countries
• Requires fiscal independence
• Tax avoidance is social irresponsibility
• Stumps economic growth and human development
“Tax avoidance is a
crime against the
nation”
(Landolf, 2006, p.7)

10. JUSTICE IN SOCIETIES
• “Society at large” as a corporation’s stakeholder
• World bank figures
• Access to clean water
• Life expectancy
• School enrolment
Sayer (2008) articulates
that people flourish or
suffer depending on
how their needs are met.

11. JUSTICE IN SOCIETIES
• Tax avoidance
• social and health problems
• Nigeria’s case
• The importance of the Procedural Justice
• Rawls (2009) “Veil of ignorance”
Center for Social Innovation (2015)

12. CONCLUSION
• Tax avoidance negatively impacts developing countries
harder.
• Tax avoidance is unjust and immoral
• G20 are implementing regulations to try reduce tax
avoidance
• Does not incorporate developing and non-OECD
countries
• Should be standard worldwide regulations

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16. THANK YOU
ANY QUESTIONS?