R. Knuutnnn (2014).
Corporatn Social Rnsponsibility, Taxaton and Aggrnssivn Tax Planning. Nordic Tax Journal
Abstract: Text examines corporate social responsibility (CSR) in terms of its extent and its
relaton to taxes. The text discusses the defnitons of CSR and solutons for its implementaton
.
1. Introducton
CSR have traditonally be divided into three elements:
(i) Economic
(ii) Environmental
(iii) Social
The focus of CSR has traditonally been on social and environmental issue, but recently the
discussion has shifed towards economics. The economic discussion is mainly focused on the
taxes that companies (don’t) pay and the use of aggressive tax planning.
According to Carroll, to completely address the range of CRS obligatons of companies, factors
such as:
(i) Economic
Responsibilites towards shareholders, i.e. to make profts.
(i) Legal
(ii) Ethical
Actng in accordance with the law is not enough. E.g. aggressive tax planning should
not be done, because while it is legal, it is not “ethically right”.
(i) Discretonary
must be taken into account.
There are numerous ways to defne CRS, but common features include:
(i) Behavior, or CRS obligatons, are voluntarily adopted
(ii) These obligatons are broad and go beyond traditonal corporate responsibilites, e.g.
that of the responsibility to make solely profts for shareholders
(iii) CRS requires openness and transparency
(iv) CRS is part of the corporate culture and not separate from the actons of the business as
a whole
Using hard law to force companies into “proper CSR” may not be a good soluton, but rather,
CSR could develop as a set of principles, e.g. sof law.
1. Dons a corporaton havn social rnsponsibility, gnnnrally or nspncially within taxatonn
1 Law, Justcn and morality
Do corporatons really have any CSR obligatons apart from their legal obligatonss
, CSR is not a legal concept, but an ethical concept based on voluntary agency. Knuutnnn goes
on to talk about legal philosophy, citng Aristotln and Fullnr. He talks about the distncton and
interrelatonship between law and morality and between legal positvism and naturalism.
A positvist would argue that corporatons have no other duty than their legal
obligatons, while a naturalist who believes in the connecton between law and
morality would argue that CSR is a very real obligaton.
He contnues his text with reference to a common law traditon that bifurcates prohibiton into
two categories:
(i) Malum in se, i.e. an act wrong that is wrong in itself (an act that is prohibited by its
inherent immorality)
(ii) Malum prohibitonn i.e. statutory prohibiton (an act that is prohibited for other than
ethical reasons)
He makes this point to remind us that laws can be passed for diferent reasons, e.g. for moral
reasons or for practcal reasons. He then points out that while aggressive tax planning might be
completely legal, it may be ethically wrong in itself, or that it doesn’t “follow the spirit of the
law” (whatever that is). Why would a corporaton pay +X% of tax if they can pay -X% of tax with
tax planning, when paying -X% tax is totally legals Besides, a company is nothing but an
aggregaton of people and their tme and money – should an abstract legal entty have a sense
of ethicss
1 Historical Pnrspnctvns
CSR has developed over the course of history. Before the 20 th-century welfare state model, CSR
was internalized and part of the “natural responsibilites” of a corporaton. Nowadays, in the
context of European welfare states, the state has “taken over the CSR”.
Case Study: Finland in the 19-20th centuries
At the tme of industrializaton, the common approach to ownership management
was patriarchalism. The business owner had to provide, on top of salaries, housing,
health care, educaton etc. This was not done out of pure good heartedness, but it
for business reasons, i.e. the business owner had to give people incentves to work
for him (e.g move into a factory town in the middle of nowhere – people would
simply not go if they didn’t think it was worth it).
Afer the enlargement of the welfare state in the 19600’s, companies no longer had
to provide for these extensive “CSR benefts”, because seemingly the state had now
taken that role.
My two cnnts:
I fnd it interestng that in the past (19 th to mid-20th century), when all taxes were lower,
companies had naturally assumed a wider scope of CSR’s
Yet afer the centralizaton of welfare afer WW2, whereby taxes went up considerably; the
states (referring to Finland and similar states) are now demanding more CSR from companies,
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