This is the conundrum that gives rise to the issue of tax avoidance: Although governments always seem to lack sufficient funds to support the needs of society, tax codes are often written that offer “a way out” of paying taxes for some but not all constituents. The ways out are referred to as loopholes that allow taxpayers to avoid taxes. This paper first defines the basic terms of tax avoidance and tax evasion and then offers an ethical review of the (...) morality of aggressive tax avoidance. Aggressive tax avoidance is then addressed in relationship a corporate entity’s tone at the top. The conclusion is drawn that use of the letter of the law to avoid payment of taxes sorely needed by governments for the good faith provision of public goods and services is ethically unacceptable. Several suggestions for change are provided, including a new financial statement disclosure and the possibility of a published corporate ethics report. (shrink)

This study investigates the association of a broad set of variables with the ethical decision making of management accountants in Libya. Adopting a cross-sectional methodology, a questionnaire including four different ethical scenarios was used to gather data from 229 participants. For each scenario, ethical decision making was examined in terms of the recognition, judgment and intention stages of Rest’s model. A significant relationship was found between ethical recognition and ethical judgment and also between ethical judgment and ethical intention, but ethical (...) recognition did not significantly predict ethical intention—thus providing support for Rest’s model. Organizational variables, age and educational level yielded few significant results. The lack of significance for codes of ethics might reflect their relative lack of development in Libya, in which case Libyan companies should pay attention to their content and how they are supported, especially in the light of the under-development of the accounting profession in Libya. Few significant results were also found for gender, but where they were found, males showed more ethical characteristics than females. This unusual result reinforces the dangers of gender stereotyping in business. Personal moral philosophy and moral intensity dimensions were generally found to be significant predictors of the three stages of ethical decision making studied. One implication of this is to give more attention to ethics in accounting education, making the connections between accounting practice and Islam. Overall, this study not only adds to the available empirical evidence on factors affecting ethical decision making, notably examining three stages of Rest’s model, but also offers rare insights into the ethical views of practising management accountants and provides a benchmark for future studies of ethical decision making in Muslim majority countries and other parts of the developing world. (shrink)

Some researchers interested in assessing moral reasoning among business practitioners or students have developed their own vignettes or scenarios set in business contexts, based on assumptions that the situations presented in the often-used Defining Issues Test (DIT) will somehow be inappropriate for these specific types of respondents. This paper is the first to examine in depth both the actual details contained in these business-oriented scenarios and empirical findings emerging from them. Among this paper’s conclusions are: (1) assumptions underpinning the presumed (...) superiority of business-oriented vignettes have yet to be tested; (2) the DIT possesses considerable advantages unavailable in alternative measures; (3) many business-oriented scenarios have underlying Dilemma themes that seem inherently ambiguous and thus of questionable relevance for assessing moral reasoning; (4) these scenarios have no obvious equivalent in the DIT and thus cannot definitively be placed under the umbrella of the latter’s demonstrated construct validity; and (5) meaningful empirical findings have not clearly emerged from investigations using business-oriented vignettes. In light of these conclusions, we recommend that investigators interested in moral reasoning advance knowledge in a coherent and unified way by using the DIT that seems entirely appropriate for use among respondents with business experience or training. Although alternative measures may have value for assessing ethical judgments, evidence of their validity as a measure of moral reasoning is lacking. (shrink)

As a contribution to the continuing debate about tax practitioner ethics, this paper explores the main streams of Western ethical thought that are relevant to tax practitioners’ work, most typically deontology and consequentialism. It then goes on to consider the impact of such ethical influences on the professional ethical codes of conduct that govern tax practitioners’ work, and attempts to unravel the complex work and ethical environment of the practice of tax in terms of tax compliance and tax avoidance. The (...) paper then examines the prior studies on tax practitioners and ethics and the type of dilemmas that practitioners face in the context of their work. The paper proceeds to examine empirically the extent to which tax practitioners take a consequentialist versus a deontological approach in their reasoning about moral dilemmas. This is carried out by an innovative use of the Defining Issues Test. (shrink)

Professional integrity is a fundamental principle of the International Ethics Standards Board for Accountants Code of Ethics. This does not apply directly to members of a particular professional body, but rather member organizations from around the globe are required to adopt a code no less stringent than the principles in the IESBA Code. Hence, all professional accountants are required to possess integrity as a core ethical principle. In the USA, certified public accountants must, in addition, also adhere to the principle (...) of client advocacy in relation to their tax clients. Despite extensive prior literature on accounting ethics, firm culture, and ethical codes, no prior research has tested whether the communication of an Integrity ethical standard actually affects practitioners’ actual judgments and decisions. In this study, we use brief interventions to determine whether a prime of two ethical professional standards affects tax practitioners’ recommendations to their clients. One implication for professionalism in tax practice is our finding that a brief intervention of professional standards can directly impact on practitioners’ judgments. Most notably, a joint presentation of Advocacy and Integrity leads to contrasting results that depend on the order of the intervention. In sum, when the Integrity standard was presented before the Advocacy standard, tax practitioners were significantly less likely to choose a tax-favorable outcome. That is, the order of professional ethical standard intervention significantly affects tax practitioners’ judgments. (shrink)