Influence of tax dodging on tax justice in developing countries: some theory and evidence from Sub-Saharan Africa.

Otusanya, Olatunde Julius; Liu, Jia; Lauwo, Sarah George

Abstract

Mobilising domestic resources - in particular taxation - is key to unlocking the resources required for public investment in infrastructure, growth and sustainable finance. Tax dodging has played a major role in causing serious damage to the economic and social landscape in developing countries. This in turn, has undermined social welfare and also investment in the public services, thereby eroding the quality of life and producing a decline in average life expectancy. This study aims to share the perception that the tax arrangements of states and the transnational corporations (TNCs) of developed states have a critical effect on the development prospects of the less powerful states in developing countries. This paper locates the role of TNCs' tax practice within the broader dynamics of globalisation and the pursuit of profits, to argue that the drive of TNCs for higher profits can enrich our understanding of why some TNCs engage in tax dodging. This paper used publicly available evidence to shed light on the role played by TNCs in tax dodging practices in developing countries of Sub-Saharan Africa. The evidence shows that tax havens and offshore financial centres, shaped by globalisation, are major structures facilitating the sophisticated tax schemes of highly mobile TNCs. This paper further shows that the corrosive effect of low-tax jurisdictions ("tax havens") continues to represent a major obstacle to a regulation of global economic relations, which is required for maintaining sustainable social and economic development of poorer states. This paper, therefore, advocates a radical reform that could minimise the attendant problems created by the activities of TNCs and the enabling structures that facilitate these practices.

Citation

OTUSANYA, O.J., LIU, J. and LAUWO, S.G. 2023. Influence of tax dodging on tax justice in developing countries: some theory and evidence from Sub-Saharan Africa. Journal of financial crime [online], 30(2), pages 332-360. Available from: https://doi.org/10.1108/JFC-01-2022-0012

• Journal Article Type: Article
• Acceptance Date: Mar 10, 2022
• Online Publication Date: Mar 10, 2022
• Publication Date: Feb 2, 2023
• Deposit Date: Mar 19, 2024
• Publicly Available Date: Mar 19, 2024
• Journal: Journal of Financial Crime
• Print ISSN: 1359-0790
• Electronic ISSN: 1758-7239
• Publisher: Emerald
• Peer Reviewed: Peer Reviewed
• Volume: 30
• Issue: 2
• Pages: 332-360
• DOI: https://doi.org/10.1108/JFC-01-2022-0012
• Keywords: Taxation; Tax dodging; Tax evasion; Tax avoidance; Tax havens; Transnational corporations; Developing countries; Tax justice; Sustainable development
• Public URL: https://rgu-repository.worktribe.com/output/2278567