A better understanding of what motivates individual and business taxpayers to participate in, and comply with, a tax system is valuable for all countries and stakeholders. Tax administrations can benefit from increased compliance and higher revenues, taxpayers are better served by tax systems that are responsive to their needs, while increased data and discussion can help researchers deepen their understanding and identify possible solutions to improving tax compliance. Other stakeholders may also benefit, including investors seeking to influence companies to engage in responsible business conduct when setting their tax policies, civil society groups advocating for improved tax policies and development partners looking to maximise the impact of development assistance.
The OECD’s tax morale workstream aims to encourage research, dialogue and actions to deepen the understanding of tax morale as well as the policies that enhance it. Tax morale, most concisely defined as the intrinsic motivation to pay tax, is complex and dynamic, varying across countries and taxpayers, as well as over time. The OECD work on tax morale seeks to help countries navigate some of this complexity by providing new research, convening and participating in multi-stakeholder discussions, and collating and disseminating good practices. Previous work has examined the role of institutional and socio-economic factors in determining tax morale as outlined in Tax Morale: What Drives People and Businesses to Pay Tax?, and has created a typology of taxpayer education initiatives together with examples of best practices explained in Building Tax Culture, Compliance and Citizenship: A Global Source Book on Taxpayer Education, Second Edition.
This report complements and builds on previous work, providing a specific focus on tax morale and multinational enterprises (MNEs). While the tax affairs of MNEs have been the subject of increased attention in recent years, there has been relatively little focus on tax morale among MNEs. This has started to change with the growing importance for investors and MNEs of Environmental, Social and Governance (ESG) considerations, and the inclusion of taxation in ESG criteria and reporting for MNEs. This report seeks to further deepen the understanding of MNE tax morale and the policies that can influence it, and it intends to stimulate and encourage further research and discussion on this topic. On the basis of this work, the OECD will seek to actively contribute to the growing global dialogue on MNE tax morale.
While tax morale is a topic of global interest, it is especially important for developing countries, where tax revenues are lower as a proportion of GDP than in OECD economies and where tax morale is currently lower. The importance of tax revenues for development has been highlighted by both the Sustainable Development Goals (SDGs) and the Addis Ababa Action Agenda on financing for development. Tax revenues are the largest source of financing for development, providing the funds governments need to invest in relieving poverty, delivering public services and building the physical and social infrastructure for long-term development. Increasing tax revenues is therefore an essential objective for developing countries as they seek to raise the additional financing needed to realise the SDGs. At the same time, research suggests that tax morale is low in many developing countries (see Tax Morale: What Drives People and Businesses to Pay Tax?); identifying policies that can increase tax morale is therefore especially important for developing countries with low tax morale.
This report was written by René Orozco, Julia Soto Alvarez and Joseph Stead of the OECD Centre for Tax Policy and Administration, under the supervision of Ben Dickinson, Head of the Global Relations and Development Division of the Centre for Tax Policy and Administration. Valuable assistance was provided by Nawal Ali, Zipporah Gakku, Karena Garnier, Hazel Healy, Alex Pick, Adriana Ruiz Esparza, Natalie Lagorce, Iratxe Sáenz de Villaverde and Carrie Tyler. The report was also informed by discussions at four regional roundtables, organised in partnership with the African Tax Administration Forum, the Asian Development Bank, the Intra-European Organisation of Tax Administrations, and the Inter-American Center of Tax Administrations. The authors would like to thank all the participants of the roundtables for their contribution, and to thank the four partner organisations for their co-operation in these events, and for valuable feedback provided on early drafts of this report.
This report was produced with the financial assistance from the governments of Ireland, Japan, Luxembourg, the Netherlands, Norway, Sweden, Switzerland, and the United Kingdom. The contents of this report do not necessarily reflect the official views of any of these governments.