CORPORATE TAX AVOIDANCE PRACTICES OF MULTINATIONALS AND COUNTRY RESPONSES TO IMPROVE QUALITY OF COMPLIANCE

The aim of this systematic review was to review the methods adopted by corporates to avoid corporate tax, factors related to it and responses of countries to improve their compliance. Using Google Scholar with the topic as the search terms and different overlapping timeframes, the search yielded 68 papers. These were listed and briefly described. The common factors in these studies were tabulated for easy reference. It was a revelation in the way the corporates adopted methods to avoid sales tax. Papers dealing with policies, strategies and impact of sales tax on these corporates were in majority. Economic growth variables and their linkage to sales tax were the basis of study of some papers. Corporate social responsibility is an essential part of corporate finance and an attempt to link it with their tax compliance practice was the subject in some. Studies also covered the role of civic and interest groups in preventing evasion of tax as detrimental to society at large. An important aspect which came to light was that as long as there is competition among countries on tax matters and the existence of tax havens, a defiance of the tax laws and the tendency to avoid tax was noticed. Only a thorough reform of the tax laws in the countries will check these large scale evasions and bring more revenue where it is required. The need of the hour is a vigilant civil rights and interest group which can add pressure on the corporates to behave responsibly and ethically towards tax compliance. The implications that these changes will bring is huge as it prevents leakage of income which is rightly due to the governments. This study will help in plugging the loop holes and ensuring stricter compliance with the laws of the land.