Ethical and Legal Responsibility of Multinational Corporate Groups for a Fair Share of Taxes

This paper deals with the question whether there are reasons to deem multinational corporate groups ethically or legally responsible for paying their fair share of taxes. Ethical concepts argue that companies should generally be held responsible, but these findings contradict the mainstream market theory that understands companies as legal fictions and therefore not ethically but merely legally responsible. In contrast, we base our argumentation on the political-cultural market theory. We find that this theory provides reasons to ascribe an ethical responsibility for paying their fair share of taxes to multinational corporate groups. We argue, moreover, that this ethical responsibility also speaks for a legal responsibility. The prevailing tax law, particularly the arm's length principle, does generally not see groups as tax subjects. This currently missing legal responsibility gives reasons to rethink tax law. Therefore, we analyze whether the OECD Pillar One proposal may be an alternative to existing law.