1. Introduction

While there has been growing research on tax morale, there has been relatively little focus on tax morale issues in MNEs and their role in building a taxpaying culture. Tax morale, or the intrinsic willingness to pay tax, is a vital part of tax systems, as all tax systems rely on voluntary compliance from most taxpayers. Previous research (OECD, 2019[1]) highlighted that while there is growing data and research available on tax morale in individuals, there is very little research that looks at businesses and almost nothing focussed on MNEs.

Improving tax morale, and by extension improving compliance, of MNEs operating in developing countries offers significant potential for increasing revenues. Developing countries are, on average, more reliant on corporate income tax than developed countries. In 2019, corporate income tax accounted for 20.1% of total tax revenues in the Asia-Pacific region, 19.2% in Africa, 15.5% in the LAC region and 10% in the OECD (OECD, 2021[2]), with MNEs being the largest source of corporate income tax. MNEs also pay significant amounts of indirect taxes and they often act as withholding agents for taxes of their employees. In many cases, MNEs are therefore responsible for a large proportion of the tax base; for example, MNEs recently accounted for 70% of Rwanda’s tax base, while a single MNE was responsible for 20% of Burundi’s total tax revenue (ATAF, 2016[3]). Improving the compliance of MNEs therefore offers the potential for governments to collect higher revenues with less enforcement effort, thereby enabling limited enforcement resources to be more efficiently deployed against those with low tax morale. As such, improving tax morale can make an important contribution to enhancing financing for sustainable development and achievement of the SDGs.

Trust is a useful entry point for examining tax morale, including for MNEs. This report brings together data sets to enable a more detailed examination of trust and the factors affecting trust between MNEs and tax administrations. There is a growing body of research highlighting trust as one of the key factors behind tax morale (see (Dom et al., 2022[4])). As trust is conditional and thus can be responsive to policy changes, it is a good place to start when examining the phenomenon and identifying actions to enhance it. To do so, this report brings together data from perception surveys of both tax administrations and MNEs; these perceptions provide valuable insights into current levels of trust and show possible ways in which trust, and by extension tax morale, can be increased.

This report uses a unique new data set of perceptions among tax administration officials concerning how large businesses/MNEs are adhering to one of the most widely endorsed voluntary principles. This data set has been obtained through a global survey that collected responses from 1 240 tax officials from 138 jurisdictions. This survey asked for perceptions of large business/MNE behaviour against the Business at OECD (BIAC) Statement of Best Practices for Engaging with Tax Authorities in Developing Countries (Business at OECD, 2013[5]), which was endorsed by BIAC in 2013. BIAC is a global network that collectively represents over seven million companies of all sizes. These principles therefore represent a broad consensus from business on what constitutes best practice. Thus while they may not include all aspects that could be examined, they provide a useful starting point for examining perceptions of business behaviour against practices that businesses have themselves endorsed. The survey also asked for perceptions of behaviour of the Big Four accountancy firms against a composite of voluntary tax principles published by some of the Big Four.

The tax administration officials’ perceptions are complemented by additional data from a previous survey on MNE perceptions on tax certainty and joint business/tax administration roundtables. Previous work by the OECD identified MNE perceptions on tax certainty as a useful indicator of tax morale and found that effective and efficient tax administration is likely to enhance compliance and morale among MNEs (OECD, 2019[1]). Both these surveys were then discussed at a series of roundtables held between December 2020 and May 2021. The virtual roundtables were organised on a regional basis (Africa, Asia, Europe and LAC) in collaboration with regional organisations: the African Tax Administration Forum (ATAF), the Asian Development Bank (ABD), the Intra-European Organisation of Tax Administrations (IOTA), and the Inter-American Center of Tax Administrations (CIAT). The roundtables were provided with a background document providing the main results from the surveys on both tax administration and MNE perceptions, and they discussed the factors that might explain the survey results as well as good practices and further actions that could help build tax morale. These discussions are reflected in the analysis of the results in chapter two, and form the basis for the range of possible actions in chapter three. As the discussions were held under the Chatham House Rule, interventions made during the roundtables are not attributed.

This report examines trust between MNEs and tax administrations, a key driver of tax morale, and highlights a range of actions that can help build tax morale. The perceptions of MNE behaviour give an overall indication of MNE tax morale. In addition, by comparing the two sets of survey data, and discussing the results at the roundtables, it has been possible to place the results in a broader context and identify not only the level of trust but also factors that may be important for building (or inhibiting) trusted relationships, such as transparency and communication. It has also been possible to identify areas where tax administrations and MNEs identify common challenges (albeit from different perspectives), suggesting that there may be mutual interest in adopting new approaches.

Not all taxpayers will be responsive to the measures set out in this report; enforcement has a crucial role to play. This report focuses on taxpayers who are responsive to efforts to improve tax morale, and especially measures to build trust. For those that are not responsive, other actions will be needed to encourage compliance. Thus while this report focuses on tax morale, and especially how trust (and the facilitation of trust) can help build the willingness for voluntary compliance, enforcement will always remain a vital component of compliance (see (Dom et al., 2022[4]) for further detail on the interaction between trust, facilitation and enforcement). Similarly, while this report focuses primarily on actions by tax administrations and businesses, there are a wider range of stakeholders (including investors and civil society) who have a role to play in influencing the tax morale of businesses and who have different tools at their disposal to those identified in this report.

While improving tax morale and strengthening the relationship between taxpayers and tax administrations should reduce disputes, it will not eradicate them. Disputes over tax can emerge for a range of reasons, and while many of these can be addressed (as this report will highlight), reducing the number of disputes, it is not possible to eliminate disputes entirely. Especially in complex areas of taxation (such as international tax) there can be legitimate differences in interpretation, which require a dispute process to resolve. Where disputes emerge, it is desirable that they are resolved effectively, with all parties accepting the validity of differing positions and the outcome, without adverse effects on their trust in the other parties or their willingness to maintain a positive relationship in the future.

This report seeks to provide an entry point for further dialogue and discussion on how to measure, track and build trust and tax morale in large businesses/MNEs, especially in developing countries. While some of the good practices and suggestions for further actions identified in the report are not necessarily new, the report may encourage increased engagement from all parties in seeking solutions to improve tax morale by providing new empirical evidence and emphasising the importance of tax morale.


[3] ATAF (2016), African Tax Outlook, https://events.ataftax.org/index.php?page=documents&func=view&document_id=15#.

[5] Business at OECD (2013), BIAC Statement of Tax Best Practices for Engaging with Tax Authorities in Developing Countries, https://biac.org/wp-content/uploads/2020/11/Statement-of-Tax-Best-Practices-for-Engaging-with-Tax-Authorities-in-Developing-Countries-Original-release-Sep-2013-1.pdf.

[4] Dom, R. et al. (2022), Innovations in Tax Compliance: Building Trust, Navigating Politics, and Tailoring Reform, World Bank Group, http://hdl.handle.net/10986/36946.

[2] OECD (2021), Revenue Statistics in Asia and the Pacific 2021: Emerging Challenges for the Asia-Pacific Region in the COVID-19 Era, OECD Publishing, Paris, https://doi.org/10.1787/ed374457-en.

[1] OECD (2019), Tax Morale: What Drives People and Businesses to Pay Tax?, OECD Publishing, Paris, https://doi.org/10.1787/f3d8ea10-en.

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