Complements, substitutes or neither? A review of the relation between corporate social responsibility and corporate tax avoidance

Abstract

PurposeThis review analyzes the existing theoretical and empirical research on the relation between corporate taxation and corporate social responsibility (CSR). By synthesizing the current literature regarding the directional relation between tax avoidance and CSR, the authors are able to identify areas where further research on this relation should be targeted to maximize the public interest.Design/methodology/approachThe authors conduct a literature review of articles published in leading journals in the fields of accounting, finance and management. Reputable working papers are included to support emerging trends in the research and suggest meaningful paths forward.FindingsThe literature reveals a complex relation between corporate tax avoidance and CSR. The published research offers theoretical and empirical support for both a substitutive and a complementary directional relation. An actionable takeaway from this review is that corporate taxation must be considered jointly with CSR when seeking to maximize the public interest.Originality/valueThe authors find a rapid influx of research over the past decade that explores the complex directional relation between corporate tax avoidance and CSR. This review will be useful to researchers that are interested in moving beyond a directional characterization of this relation. By synthesizing both established and emerging literature, the authors provide a foundation and direction for future research to examine issues that may directly inform tax or firm policies to increase overall stakeholder welfare.

Tax amnesty, corporate social responsibility disclosure, and organizational inertia

“…Organizational legitimacy and business ethics require firms to adhere to the norms of society by assuring no harm from the business operations and by providing contributions to society and the environment. In the taxation context, when aiming to optimize the public interest, it is essential for companies to comply with tax regulations by fulfilling the obligation to pay taxes in concert with implementing CSR (Jemiolo & Farnsel, 2023).…”

Research on Global Tax Governance under the Background of Digital Economy

“…Johannes et al (2023) pointed out that in the era of digital economy, due to the uncertainty of value creation, the ambiguity of value attribution, the "benefit-burden dislocation" under the free mode and the weakening of the boundary between consumers and producers, it is difficult to accurately verify the national economic accounting and digital economic scale accounting, which leads to the difficulty in determining the tax base valuation. At the same time, some scholars point out that the digital economy is characterized by networking, virtualization and remote transaction, and the boundary between supply and demand is gradually diluted, which makes the taxpayers diversified and complicated, which brings many difficulties to the definition of taxpayers (Nataliia et al, 2016;Kliestik et al, 2021;Jemiolo et al, 2023). In addition, a few scholars pointed out that as far as China is concerned, although the tax authorities have established tax collection systems such as "Golden Tax Phase III" and "Personal Income Tax" to improve tax governance capabilities, the application of technologies such as cloud computing, artificial intelligence and blockchain has not been comprehensive, and it is difficult to intelligently monitor and analyze the structure and changes of tax sources and tax revenues, and it is difficult to finely control tax evasion caused by false reporting, malicious tampering and destruction of basic data of electronic tax collection (Xu et al, 2022;Miloš et al, 2023).…”