The Relationship Of Tax Avoidance With Corporate Social Responsibility

Corporations are encouraged to conduct their activities in an ethically responsible manner, however neither the corporate world nor academia has produced a single – all encompassing definition of corporate social responsibility (CSR). The basic problem is that there are too many self-serving definitions that often lean toward the specific interests of the entities involved (Van Marrewijk, 2003). There has even been a quantitative study conducted on the many definitions of the term (Dahlsrud, 2006).

Based on the movie “A Christmas Carol 2009”, issue that we found that relevant to the business ethic is the corporate social irresponsibility (CSI). Corporate social irresponsibility (CSI) refers to the dark side, as it investigates the wrongful and damaging business decisions that managers might take. Corporate social irresponsibility to concepts such as corporate culpability and undesirability and irresponsibility, in its various forms such as corruption, bribery, environmental degradation, and social injustice, is most frequently found in poorer regions, those with fewer social resources or educational opportunities (Sanchez‐Runde et al., 2013, p. 690). Because of corporate social irresponsibility, the business performance decline, customer dissatisfaction and low profitability will be happen.

Paying taxes is wonderful and all but it is not the only social responsibility that a corporation should have.

Milton Friedman was a 20th century American economist who advocated free-market capitalism. In 1970 he submitted an editorial article entitled “The Social Responsibility of Business is to Increase its Profits” to the New York Times. In the article, Friedman argues that in free market systems it is nonsensical to make corporate entities adhere to “social responsibilities of business” pushed by activists, as corporations are artificial in nature, and thus do not have any social responsibilities other than to make money for the shareholders of the company. I will argue against this paper and support the claim corporations do in-fact have moral and ethical obligations to more than just their shareholders, and that many individuals have their stakes and livelihoods embedded within the acts of corporations. As well, the idea in the article that corporations are not moral agents has led to unsavory violations of human rights across the world, failing Kant’s second formulation of the Categorical Imperative, as well as not satisfying Act Utilitarianism. Thus, corporations, and individuals within those corporations, possess considerable ability to make ethical decisions that have great impact to many people, culminating in the truth that corporations have moral status.

Milton Friedman was an American economist, statistician and writer, who had a massive impact on the research agenda of the economics profession. His famous words “the only responsibility of business is to increase its profits” (Friedman, Milton. 1970) led to many controversial debates on whether businesses should have ethics or if profit should be their main goal. Corporate social responsibility has many definitions, as its interpretation is quite loose, so I have chosen one that relates the most to this essay, given by the World Business Council for Sustainable Development, in 2000: “Corporate social

The answer to the questions of Why does a business exist? and What purposes does/should it serve within society? are not agreed upon by all. The concept that companies having social obligations beyond their economic benefit is controversial (Chandler & Werther Jr., 2014). This paper will briefly examine the viewpoint of the well-known economist, Milton Friedman, whose assertions have been very influential in the debate surrounding corporate social responsibility (CSR). Arguments, both in support of, and against Friedman’s assertions, will be presented along with examples of two organizations having contrasting attitudes regarding CSR. Lastly, the paper will examine three organizations whose literal adherence to Friedman’s view has led to the rationalization of unethical behaviors.

Corporations today are faced with the hard underlying pressures to be liable and explicit, while also having high expectations to divulge an extensive amount of information about behaviours and activities, including their social responsibilities. In our profit-driven society, companies are confronted with the dilemma of choosing between increasing revenue in order to satisfy stakeholders or acting in an ethical and moral way to fulfil their obligations to society (McShane, Olekalns and Travaglione 2013).

Corporations, an indispensable part of society, has existed for a long time. In order to better the long-term development and be competitive, having a deep understanding of corporate social responsibility is key to the survival of a particular corporation. Over the past few decades, the social responsibility of corporations has been considered as a controversial issue among experts. Friedman (1970), a recipient of the Nobel Prize in Economics and Sciences, claimed that the only social responsibility of business is to increase its profit. However, still others disagree with this point of view. By contrast, they argue that if corporations consider increasing as their only social responsibility, it will not only harm the right of employees, but also trigger social problems. This essay aims to explore what should be the social responsibilities of corporations, and to analyze whether the only responsibility of corporations should be increasing its profit. In order to solve the problem, firstly, it is necessary to expound what corporate social responsibility is. Then, it is indispensable to clarify Friedman’s view regarding the only social responsibility of the business. Subsequently, different social responsibilities of corporations, such as ethical responsibilities, philanthropic responsibilities and legal responsibilities, raised by Carroll also need to be evaluated. Finally, another

There is a very clear distinction between tax avoidance and tax evasion from academic publications. Tax books have defined tax avoidance as “the lawful minimization of tax liability through sound financial planning techniques, while tax evasion is the “unlawful attempt to minimize tax liability through fraudulent techniques to circumvent or frustrate tax laws”. The consequences of either action are also clear. The former is not punishable by law while the latter is. However, the lines between evasion and avoidance have become blurred between the government and the general public.

The idea that morally dubious goals may be legitimate inside capitalism will be discussed in light of a tax avoidance case study. Apple, a multinational technology company, has avoided paying its fair amount of income tax for years. This paper will consider the structural embeddedness of Apple’s legitimised goal—the maximisation of profit—through the ‘Double Irish Dutch sandwich’ tax haven model. Durkheim’s theory of collective conscience was used in explaining the legitimisation of the company’s profits-driven goal, and how its amorality becomes apparent outside the economical sphere. This paper will also discuss the interconnected nature of the harm and benefits in the deal made between Ireland and Apple. The association between legitimations of Apple’s conduct and its socially challenging behaviour has been analysed to be ambiguous in the letter of the law. The conclusion will shed light on the morally grey area of a company’s responsibility to its shareholders versus the needs of the community.

Crane, A. and Matten, D. (2010) ‘Corporate social responsibility’, (3rd edition) Business Ethics. Oxford: Oxford university press, pp.51-60

There is an ongoing debate about the relationship of tax avoidance with the corporate social responsibility (CSR) that companies undertake the responsibility for social welfare and development (Matten and Moon, 2008), and ethical behaviour of companies, which can be defined as govern the actions of an individual in the business organizations under contemporary standards (Ferrell and Gresham, 1985). Tax avoidance, which refers to companies use suitable methods to reduce the amount of tax within the law is different with tax evasion, which illegally reduction of tax (Hasseldine and Morris, 2013).

Motives for Corporate Social Responsibility (Graafland, J. & Mazereeuw-Van der Duijn Schouten, C. 2012) analyze the motivations of directors to take responsibility for the labor, environmental and social aspects in business. It distinguishes the Corporate Social Responsibility (CSR) by conducting a survey consisting of a sample of 473 executives. What is more, the motives are classified as three types: “financial motives”, which is external, “ethical and altruistic” which are internal. the corporate social responsibility is divided into several aspects like working conditions and natural environment, which may cause different motivations.

The paper addresses the concept of business ethics and law of Corporate Social Responsibility. The study of behaviour of the organisations should include how responsible it is towards the community and its employees, customers and investors.

In recent past, the concept of Corporate Social Responsibility has gained much attention. The CSR and citizenship which aims at invoking the corporate conscience whereby the companies incur short term cost but these short term cost do not provide immediate financial benefit, instead these costs promote positive social environmental change. The Companies Act of 2013 which replaced the 60 years old Act of 1956 gave a provision with the concept of mandatory CSR. This research paper is focused on the provision relating to mandatory spending and disclosure relating to Corporate Social Responsibility activities. It also discusses the major loopholes of provision which hinders the practical applicability of Section 135 of the Companies Act, 2013