Allocation of corporate social responsibility and tax planning
List of Authors
  • Norhidayah Mohd Salleh

Keyword
  • corporate social responsibility, CSR, tax planning, tax

Abstract
  • This study aims to find empirical evidence of the relationship between corporate social responsibility (CSR) allocation and tax planning. Past studies that assess the relationship between the allocation of CSR and tax planning mostly focused on developed countries. However, there was a poor implementation of assessment in developing countries such as ASEAN countries, especially in Malaysia. Therefore, this study is important to be implemented because it links the allocation of CSR and tax planning in a study based on the institutional background in Malaysia. In Malaysia, CSR information is reported voluntarily. From a tax standpoint, CSR is one of the tax expenses that can reduce a firm’s tax. The study sample was 278 public firms listed on the Main Market and ACE market on Bursa Malaysia from various business sectors in 2015-2016. This study uses quantitative methods of correlation study. The allocation of CSR variables is measured using the Allocation of CSR index revealed in the firm’s annual report during the study period. Tax planning variables are measured using tax effective rates and tax book differences. Tax planning methods using tax effective rates and tax-book differences show the actual relationship between firm earnings before tax and current tax expenses in the current year based on both methods. In the regression model of the study, there are several control variables that affect corporate tax planning namely, size, profitability, leverage, and capital intensity.

Reference
  • 1. Ahmad, N. N. N., Sulaiman, M., & Siswantoro, D. 2003. Corporate social responsibility disclosure in Malaysia: An analysis of annual reports of KLSE listed companies. International Journal of Economics, Management and Accounting 11(1): 1-37.

    2. Anas, A., Abdul Rashid, H. M., & Annuar, H. A. 2015. The effect of award on CSR disclosures in annual reports of Malaysian PLCs. Social Responsibility Journal 11(4): 831-852.

    3. Avi-Yonah, R. S. 2008. Corporate social responsibility and strategic tax behavior. Dlm. Tax and corporate governance , hlm. 183-198. Springer Berlin: Heidelberg.

    4. Avi-Yonah, R. S. 2009. Taxation, corporate social responsibility and the business enterprise. Comparative Research in Law & Political Economy. Research Paper No. 19/2009.

    5. Avi-Yonah, R. S. 2014a. Just Say No: Corporate Taxation and Corporate Social Responsibility. Working Papers in Law and Economics. University of Michigan, 1 Januari 2014.

    6. Avi-Yonah, R. S. 2014b. Corporate Taxation and Corporate Social Responsibility. New York University Journal of Law & Business 11(1): 1-29.

    7. Bidin, A. 2008. Corporate Social Responsibility: Trends And Developments In Malaysia. Jurnal Undang-Undang Dan Masyarakat, 175–189.

    8. Brooks, C., Hillenbrand, C., & Money, K. 2015. What Stakeholders Expect from Corporations When it Comes to Paying Tax: Corporate Reputation and Optimal Tax Planning. Boleh didapati di SSRN 2578969.

    9. Bursa Malaysia. 2010. Bursa Malaysia's CSR Framework. http://www.bursamalaysia.com/market/listed-companies/sustainability/frameworks/bursa-malaysias-csr-framework/ [16 Mac 2016]

    10. Bursa Malaysia. 2016. List of Companies. http://www.bursamalaysia.com/misc/system/assets/6237/Listing%20Division%20Contact%20List%20080115.pdf [26 Oktober 2016]

    11. Cheng, S., & Lin, K. Z. 2014. Corporate Social Responsibility and Tax Reporting Aggressiveness in a Transition Economy. Boleh didapati di SSRN 2526671.

    12. Collier, D. 2013. Tesis Dr. Fal, University of London. http://www.lccge.bbk.ac.uk/publications-and resources/postgraduate-research/docs/130929_collier_dissertation.pdf [19 Oktober 2016]

    13. De Simone, L., Nickerson, J., Seidman, J. K., & Stomberg, B. 2015. How Reliably Do Financial Statement Proxies Identify Tax Avoidance?. http://web.stanford.edu/~lnds/dnss_07.26.2016.pdf [15 Mac 2017]

    14. Dowling, G. R. 2014. The curious case of corporate tax avoidance: Is it socially irresponsible?. Journal of Business Ethics 124(1): 173-184.

    15. FTSE Bursa Malaysia Index Series. 2016. https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&ved=0ahUKEwiI1_6S5YbQAhVMKMAKHe50DCYQFgglMAE&url=https%3A%2F%2Fwww.ftse.com%2FAnalytics%2FFactSheets%2FHome%2FDownloadSingleIssue%3FissueName%3DFBMKLCIMR%26IsManual%3DTrue&usg=AFQjCNEnhMMlDRFcmDczp3QWhcFDzrhEeg&sig2=fzD7nATDqzaFzdf1FYdTeg [1 November 2016]

    16. Groen, T. 2014. The Influence of Corporate Social Responsibility on International Tax Planning. Tilburg University.

    17. Guthrie, J., & Mathews, M. R. 1985. Dlm. Rosli, M. H., Said, J., & Fauzi, N. A. Corporate Social Responsibility Disclosure (CSRD) in Malaysian Telecommunication Companies. South East Asia Journal of Contemporary Business, Economics and Law 6(1): 45-52.

    18. Hamid, F. Z. A., & Atan, R. 2011. Corporate social responsibility by the Malaysian telecommunication firms. International Journal of Business and Social Science 2(5): 198-208.

    19. Hanlon, M., & Heitzman, S. 2010. A review of tax research. Journal of Accounting and Economics 50(2): 127-178.

    20. Harari, M., Sitbon, O., & Donyets-Kedar, R. 2013. Aggressive Tax Planning and Corporate Social Responsibility in Israel. Accountancy Business and the Public Interest 2013. http://visar.csustan.edu/aaba/HarariandSitbon2013.pdf [15 Mac 2013]

    21. Hoi, C. K., Wu, Q., & Zhang, H. 2013. Is corporate social responsibility (CSR) associated with tax avoidance? Evidence from irresponsible CSR activities. The Accounting Review 88(6): 2025-2059.

    22. Huseynov, F., & Klamm, B. K. 2012. Tax avoidance, tax management and corporate social responsibility. Journal of Corporate Finance 18(4): 804-827.

    23. Jabatan Dasar Percukaian, Lembaga Hasil Dalam Negeri Malaysia. 2nd Korea Business Dialogue ‘Corporate Social Responsibility’. https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&ved=0ahUKEwiVjPKx1tLOAhWItI8KHTYlCnUQFggmMAE&url=http%3A%2F%2Fmys.mofa.go.kr%2Fwebmodule%2Fcommon%2Fdownload.jsp%3Fboardid%3D1591%26tablename%3DTYPE_LEGATION%26seqno%3Df87feffe9f8e019f8803eff4%26fileseq%3Dff3fda062070fb4060052fc2&usg=AFQjCNFFC4BfKyRRtghVlobhW5nUkEwXQA&sig2=XQKXwhs9W0zwpeVl-Tfw3A [21 Ogos 2016]

    24. Kvas, P. D. S. M., & Mumel, D. 2017. Corporate social responsibility and corporate taxation. The 12th IRDO International Scientific Conference SOCIAL RESPONSIBILITY AND CURRENT CHALLENGES 2017. MARIBOR, SLOVENIA, EU. 28 SEPTEMBER 2017.

    25. Laguir, I., Staglianò, R., & Elbaz, J. 2015. Does corporate social responsibility affect corporate tax aggressiveness?. Journal of Cleaner Production 107: 662-675.

    26. Landry, S., Deslandes, M., & Fortin, A. 2013. Tax aggressiveness, corporate social responsibility, and ownership structure. Journal of Accounting, Ethics & Public Policy 14(3): 611-645.

    27. Lanis, R., & Richardson, G. 2012a. Corporate social responsibility and tax aggressiveness: a test of legitimacy theory. Accounting, Auditing & Accountability Journal 26(1): 75-100.

    28. Lanis, R., & Richardson, G. 2012b. Corporate social responsibility and tax aggressiveness: An empirical analysis. Journal of Accounting and Public Policy 31(1): 86-108.

    29. Lanis, R., & Richardson, G. 2015. Is corporate social responsibility performance associated with tax avoidance?. Journal of Business Ethics 127(2): 439-457.

    30. Lee, B. B., Dobiyanski, A., & Minton, S. 2015. Theories and Empirical Proxies for Corporate Tax Avoidance. The Journal of Applied Business and Economics 17(3): 21-34.

    31. Lembaga Hasil Dalam Negeri Malaysia. 2016. http://www.hasil.gov.my/bt_goindex.php?bt_kump=5&bt_skum=1&bt_posi=4&bt_unit=1&bt_sequ=1&bt_lgv=1 [21 Ogos 2016]

    32. Liao, Y. H., & Fu, Q. R. (2015, March). Research on the Correlation between Book-Tax Difference and Earnings Management. In 2015 International Conference on Education Technology and Economic Management. Atlantis Press.

    33. Martinez, A. L., & Ramalho, G. C. 2014. Family Firms and Tax Aggressiveness in Brazil. International Business Research 7(3): 129.

    34. May Yee, N. 2014. Is Corporate Social Responsibilities Hypocritical? International Journal of Arts and Commerce. 3(7): 72–84.

    35. McBarnet. 2004. Dlm. Alm, J. Expanding the theory of tax compliance from individual to group motivations. A Handbook of Alternative Theories of Public Economics, hlm. 260.

    36. Mirfazli, E. 2008. Corporate social responsibility (CSR) information disclosure by annual reports of public companies listed at Indonesia Stock Exchange (IDX). International Journal of Islamic and Middle Eastern Finance and Management 1(4): 275-284.

    37. Moir, L. 2001. What do we mean by corporate social responsibility?.Corporate Governance: The international journal of business in society 1(2): 16-22.

    38. Mukherjee, A., & Chaturvedi, R. 2013. From CSR to MCSR: The Journey Towards Mandatory Corporate Social Responsibility in India. Golden Research Thoughts, ISSN, hlm. 2231-5063.

    39. Noguera, J. A., Quesada, F. J. M., Tapia, E., & Llàcer, T. 2014. Tax compliance, rational choice, and social influence: An agent-based model. Revue française de sociologies 55(4): 765-804.

    40. Preuss, L. 2012. Responsibility in paradise? The adoption of CSR tools by companies domiciled in tax havens. Journal of business ethics 110(1): 1-14.

    41. PWC. 2013. Malaysian Tax and Business Booklet. www.pwc.com.my [12 Oktober 2015]

    42. Risk Metrics Group. 2010. How to Use KLD STATS & ESG Ratings Definitions.http://cdnete.lib.ncku.edu.tw/93cdnet/english/lib/Getting_Started_With_KLD_STATS.pdf [2 November 2016]

    43. Rosli, M. H., Said, J., & Fauzi, N. A. 2015. Corporate Social Responsibility Disclosure (CSRD) in Malaysian Telecommunication Companies. South East Asia Journal of Contemporary Business, Economics and Law 6(1): 45-52.

    44. Rosli, M. H., Fauzib, N. A., Mohd, M. F. A., Azamic, F. M., & Saide, J. 2016. Company Characteristics and Corporate Social Responsibility Disclosure of Malaysian Listed Companies. International Conference on Accounting Studies (ICAS) 2016. Langkawi, Kedah, 15-18 Ogos.

    45. Rujukan Perundangan\Akta Cukai Pendapatan 1967 - Seksyen\PART III - ASCERTAINMENT OF CHARGEABLE INCOME. 2011. http://lampiran.hasil.gov.my/pdf/pdfam/4549.pdf [5 November 2016]

    46. Salihu, I. A., Annuar, H. A., & Obid, S. N. S. 2015. Foreign investors' interests and corporate tax avoidance: Evidence from an emerging economy. Journal of Contemporary Accounting & Economics 11(2): 138-147.

    47. Sharma, B. 2013. Contextualising CSR in Asia: Corporate social responsibility in Asian economies, hlm. 150-160.

    48. Shirley, C., Suan, A. G., Leng, C. P., Okoth, M. O., Fei, N. B., & PJU, K. D. 2009. Corporate Social Responsibility Reporting in Malaysia: An Analysis of Website Reporting of Second Board Companies Listed in Bursa Malaysia. SEG Review 2(2): 85-98.

    49. Sikka, P. 2010. Smoke and mirrors: Corporate social responsibility and tax avoidance. Accounting Forum Jil. 34 (3), 153-168. Elsevier.

    50. Steijvers, T., & Niskanen, M. 2011. Tax Aggressive Behaviour in Private Family Firms-the effect of the CEO and board of directors. SSRN 1937651.

    51. Sumiani, Y., Haslinda, Y., & Lehman, G. 2007. Environmental reporting in a developing country: a case study on status and implementation in Malaysia. Journal of Cleaner Production 15(10): 895-901.

    52. Taklimat ASEAN. 1967. Akta Cukai Pendapatan Malaysia 1967. www.aseanbriefing.com [4 November 2016]

    53. Takril, N. F. B., & Sanusi, S. W. S. A. 2014. An Exploratory Study of Malaysian Tax Practitioners’ Perception on the Practice of Aggressive tax Avoidance. E-proceeding of the Conference on Management and Muamalah (CoMM 2014) Synergizing Knowledge on Management and Muamalah, hlm. 218-231.

    54. Thomson Reuters. 2016. 3 September. Apple’s €13 billion Irish back-tax bill reverberates. https://blogs.thomsonreuters.com/answerson/apples-13-billion-irish-back-tax-bill-reverberates/ [8 November 2016]

    55. Tuhin, M. H. 2014. Corporate social responsibility expenditure and profitability: An empirical study of listed banks in Bangladesh. International Journal of Scientific Footprints 2(1): 107-115.

    56. Utusan Online. 2016. Jenis-jenis perniagaan syarikat tersenarai di Bursa Malaysia. http://www.utusan.com.my/bisnes/korporat/jenis-jenis-perniagaan-syarikat-tersenarai-di-bursa-malaysia-1.382504#ixzz5J74QVjzc [14 September 2016]

    57. Van Renselaar, J. 2016. The Influence of Corporate Social Responsibility on the Level of Corporate Tax Avoidance. http://www.diva-portal.org/smash/get/diva2:904414/FULLTEXT01.pdf [16 Mac 2017]

    58. Vintilă, G., Armeanu, Ș. D., Filipescu, M. O., Moscalu, M., & Lazăr, P. 2012. Study Regarding Fiscal Policy–Corporative Social Responsibility Correlation. Theoretical and Applied Economics 4(4): 5.

    59. Wang, M. 2016. Does the Impulse of Corporate Social Responsibility Mean Low Tax Avoidance? Evidence from Listed Companies’ Charitable Foundations. http://textlab.io/doc/8800888/does-the-impulse-of-corporate-social-responsibility-mean-... [16 Mac 2017]

    60. Wood, W. C. 2013. The Cost of Progress: Enduring the Tax Deductibility of International Corporate Social Responsibility Initiatives. The Global Business Law Review 4(1): 4.

    61. Ylönen, M., & Laine, M. 2015. For logistical reasons only? A case study of tax planning and corporate social responsibility reporting. Critical Perspectives on Accounting 33: 5-23.