Income Tax of Portuguese Listed Companies in Financial and Corporate Social Responsibility Reports

Julija Neves,Fábio Albuquerque

doi:10.7819/rbgn.v21i3.4009

Abstract

Purpose – The purpose of the study was to evaluate reporting for income tax from a social responsibility perspective. Specifically, the research aims to ascertain the relationship between various aspects of income tax disclosure, namely its extent, effective tax rate and reporting for tax in corporate social responsibility reports, and various factors such as size, profitability, leverage and sector. Design/methodology/approach – Data collected from financial and corporate social responsibility reports covering the 2010-2014 period of entities included in the Portuguese Stock Index (PSI) 20 were used to build two indices. Using the logistic regression technique to assess the data gathered for two models, the indices were used as the dependent variables within the first model, and the effective tax rate was used in the second one. Size, profitability, leverage, sector and the effective tax rate were chosen as independent variables. Findings – The findings demonstrate the existence of a relationship between disclosure indices and size (positive), leverage (negative) and sector (negative). For the effective tax rate, only sector revealed a significant positive relationship. Originality/value – The study contributes to the relatively novel idea of viewing income taxes as a matter of corporate social responsibility, by focussing on reporting. To the best of the authors’ knowledge, the study is unique in analysing the data collected from the corporate social responsibility perspective.

Highlights

Tax, fair share, transparency and tax avoidance issues have been increasingly debated over recent years
According to Scheiwiller and Symons (2014), who discuss tax and corporate social responsibility (CSR) in an article published in the Organisation for Economic Cooperation and Development (OECD) Observer online, the groups campaigning on tax would like to see “a change in reporting standards to require companies to report their tax affairs in much more detail in their accounts, essentially a profit and loss account, assets and tax charge for every country where they operate, known as countryby-country reporting”
As far as CSR reporting is concerned, the academic research on whether corporate income tax is a subject for CSR reporting, on paying one’s fair share of tax and on tax avoidance as an irresponsible CSR activity is still emerging”ISBN” : “00014826”, “ISSN” : “00014826”, “PMID” : “91960059”, “abstract” : “We examine the empirical association between corporate social responsibility

Summary

Introduction

Fair share, transparency and tax avoidance issues have been increasingly debated over recent years. According to Scheiwiller and Symons (2014), who discuss tax and CSR in an article published in the Organisation for Economic Cooperation and Development (OECD) Observer online, the groups campaigning on tax would like to see “a change in reporting standards to require companies to report their tax affairs in much more detail in their accounts, essentially a profit and loss account, assets and tax charge for every country where they operate, known as countryby-country reporting”. This paper aims to investigate the disclosure matters and effective income tax rate related to tax on income or corporate tax, from a CSR viewpoint To this end, the practices based on accounting standards as well as social responsibility guidelines will be examined and, CSR reports will be used as another source, in addition to the usual analysis exclusively based on annual consolidated reports. This research will represent a novel contribution to the existing national academic research and available international research

Literature review

Hypotheses and methodology

Findings and discussion