Corporate Tax Abuse on the Business and Human Rights Agenda

Abstract: Corporate tax evasion, tax avoidance, and aggressive tax planning undermine states’ ability to protect, respect and fulfill human rights since states are deprived of necessary resources to realize economic, social and cultural rights as well as civil and political rights. Corporate tax has previously been called the elephant in the room within the United Nations’ (‘UN’) framework of Business and Human Rights; however, now it is recognized as a key issue for the next decade. The thesis’ overarching aim is to examine the potential of integrating corporate tax abuse into the UN’s soft law framework of Business and Human Rights that is being hardened into law by the European Union (‘EU’). The United Nations Guiding Principles on Business and Human Rights (‘UNGPs’) are built upon three pillars: (1) the state duty to protect human rights; (2) the corporate responsibility to respect human rights; and (3) access to remedy for victims of business-related human rights abuses. The research is guided by a mixed methodological approach including a doctrinal research method and a critical analysis of the law with references to IHRL, EU law, and International Tax Law. In the first study, the thesis clarifies states’ international human rights obligations under the first pillar of the UNGPs concerning corporate tax abuse by examining states’ obligations under IHRL in relation to resource mobilization. The thesis concludes that states must not only generate resources; they must also prevent and take strong measures against corporate tax abuse to demonstrate that every effort has been made to devote the maximum of all available resources for the realization of human rights. In the second study, the thesis analyzes if the EU’s regulatory modalities on Business and Human Rights include corporate tax. The thesis concludes that the EU’s existing framework only contains two references to tax. Furthermore, the proposed Directive on Corporate Sustainability Due Diligence excludes tax. Yet, the thesis demonstrates that the EU’s legal framework on anti-tax avoidance may further Business and Human Rights objectives. In the thesis’ third and final study, the thesis analyzes potential advantages and obstacles to integrating tax into the Business and Human Rights framework. It demonstrates that the integration of tax would favor a coherent framework of Business and Human rights while incorporating all adverse human rights impacts from businesses. Moreover, the thesis argues that integration may foster a different approach to tax compliance if corporations recognize the relationship between tax and human rights since corporations’ responsibility to respect human rights extends to tax strategies and tax behaviors. The thesis concludes that despite the advantages and the expectation on corporations in the next decade to apply Human Rights Due Diligence on tax – which could help corporations identify and prevent adverse impacts – remediation in the third pillar of the UNGPs constitutes an inherent challenge. Corporate tax abuse has a systemic, cumulative, and harmful impact on human rights equally to climate change. Individual remediation is therefore not appropriate since corporate tax abuse lacks a direct causal link between the tax behavior of a single corporation and the specific human rights impact of an individual or community.