Taxation, General Anti-Avoidance Rules and Corporate Social Responsibility

Abstract

As a result of the OECD/G20 project on base erosion profit shifting as well as the adoption of the EU anti-tax avoidance directive, many countries have recently introduced or strengthened general anti-avoidance rules (GAARs) in their tax treaties and domestic tax legislations. Arguably, such general anti-avoidance rules are turning the responsibility to obey the spirit of the law from a CSR expectation into a legal obligation. Against this background, it is discussed whether CSR can or should (still) play an important role with respect to measuring and guiding MNEs’ tax planning behaviour. It is concluded that the widespread use of GAARs cannot be expected to eliminate or significantly reduce the need for CSR considerations and guidance – at least not in the foreseeable future, inter alia because these provisions bring along significant interpretive uncertainty and cannot be expected to prevent all tax planning that compromises the spirit of the tax legislation. Accordingly, instead of downplaying the role of CSR and responsible business conduct, it is suggested to update the chapter on taxation in the OECD Guidelines for Multinational Enterprises in order to provide better and more detailed guidance on how MNEs should strike a proper balance between tax planning and CSR.