Corporate governance and tax fraud: a theoretical analysis and two case studies
Published 2015-12-10
Keywords
- Tax fraud,
- corporate governance,
- agency theory,
- stakeholder’s theory
How to Cite
Abstract
Taxes are considered one of the main resources for the fight against poverty. This study seeks to establish the relationship between the definition of Corporate Governance (CG) and taxes. Taxes can be seen as the just retribution to State social capital, otherwise, as simple expenses to be reduced to a minimum. Thus, in a first part, this text shows the analysis of the tax’s meaning being used in Chile.
The evidence suggests that the Chilean Society believes that the CG only creates shareholder value.
As a consequence, the tax is a transfer of value from shareholder to State. In addition, the paper analyzes tax fraud conceptualization.
The second part comprises of two studies. A possible Penta Group’s tax fraud financed by private capital and Codelco-Minmetals, a state based company. In these case studies, it is presented the facts and the history of the investigation. Then, the authors establish a relationship between CG and the facts. In both cases the study has detected a malfunction in the CG that favors the occurrence of situations of tax fraud. In the case of Penta, the relationship is enhanced by the pressure for greater benefits. Likewise, Codelco-Minmetals relationship is based on the need to finance new projects. The use of transfer pricing and the relocation of results to taxes paradises put into question the role of accounting. Accounting is not neutral, and fulfills an important role in the distribution of income and its impact on social inequality and, consequently, into poverty reduction.
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References
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