Corporate Social Responsibility, Tax Avoidance, and Evasion: Analysis of Dimensions and Components

Tax avoidance is the perceived manipulation of legal loopholes in tax law to alleviate tax-related burdens, often implemented by deploying revenue in a low-tax, transition-priced area, also known as a tax haven. Tax is itself an expenditure imposed by the government on all for-profit organizations that generate any sort of revenue.

Taxation is one of the most predominant sources of government revenue that not only provides the financial resources that governments are looking after but also greatly contributes to a better distribution of income and wealth. The structure of tax revenues along with the share of taxes from total public revenues differs from one country to another, mainly owing to economic, cultural, and historical conditions. Tax avoidance and tax evasion render the countries' tax revenues always lower than expected. Therefore, all the issues contributing to and corresponding to the tax paradigm are highly concerning for society. Companies employ differing mathematical procedures to actively pursue tax evasion. Tax avoidance is nevertheless the exploitation of legal loopholes in tax law to mitigate taxes, which can be done by transferring revenue to a low-tax area or transfer pricing. Tax avoidance can be measured in several ways, including effective tax rates and tax differences. The results of this study indicate that managers highly regard strategies that reduce the company's tax and financial income (i.e., strategies to reduce tax expense in financial statements), as well as strategies that reduce cash taxes (i.e., strategies that make a difference in income tax payments).

The community is on a relentless quest to see whether or not companies and individuals pay their fair share of taxes against the social costs spared for them. As such, the purpose of this study was to examine the effects of selected dimensions of social responsibility on tax avoidance and tax evasion. The research tools employed in this research are questionnaires, documents, records, and financial information of companies listed on the Tehran Stock Exchange. The statistical sample also consists of 156 listed companies from the period 2006 to 2019. Findings indicate a significant effect of social responsibility on tax avoidance and evasion.