Multinational Corporation’s (MNC) alignment of tax planning with corporate strategy became a central debate after the 2008 financial crises (The Economist, 2012). The societal concerns around this debate can be crystalized in Margaret Hodge’s comment, “that (Google’s’) behaviour on tax was ‘devious, calculated and, in my view, unethical’"(Bowers & Sayal, 2013). This paper takes fresh perspective on this topical debate by considering the alignment of MNC tax planning and corporate strategy from a non-tax perspective.
The tax literature makes a strong case as to the importance of MNC tax planning (Scholes, Wolfson, Erickson, Maydew, & Shevlin, 2013; Yancey & Cravens, 1998) and the need to align it with corporate strategy (Glaister & Frecknall-Hughes, 2008; James, 2005; Mulligan, Gawley, & Cunningham, 2015). The corporate strategy literature makes no similar case. This paper will shine a spotlight on this gap by focusing on a number of relevant themes ranging from the traditional view of MNC corporate parenting (Goold & Campbell, 2002) and adding value (McKinsey & Company, 2015), to how the more recent literature shows MNC use tax planning to enhance competitive advantage (Peteraf, 1993) in the form of lower ETRs (McKinsey & Company, 2015; OECD, 2015) by using iterative and tactical adjustments (Mollan & Tennent, 2015) of nodes (Hedlund, 1986) and supporting legal personalities (Hu, 1992) to allow positioning of revenues and costs.
The paper draws initial findings from the taxation and strategy literatures by collecting and examining primary data in the form of interview transcripts, post-interview notes and interviewee e-mail correspondence from 5 to 7 interviewees from 3 to 5 MNCs. These data will form the first wave of data gathering supporting the researchers PhD and overall methodological plan. The data is examined using the literature in two stages; the first stage explores what the tax literature says about corporate strategy and alignment; the second stage looks at the same issue from the non-tax corporate strategy perspective. This examination will form the platform from which the structure of the findings evolves.
In response to the societal and academic concerns and interest this paper will review the tax planning and corporate strategy literatures as they apply to alignment. Interestingly, despite the tax planning literature arguing as to the importance of its alignment with corporate strategy (Glaister & Frecknall-Hughes, 2008; James, 2005), the corporate strategy literature shows little more than passing interest in taxation, tax planning and alignment. This paper will attempt to bridge this gap by looking at the literatures from a non-tax perspective.
The paper concludes by positing that aligning tax planning and corporate strategy in MNCs is a significant, evolving, and emotive issue. This paper will stand back and take a fresh perspective by focusing on what the literatures from a unique non-tax perspective. The primary and secondary data will be drawn from a carefully targeted blend of non-tax members of MNC TMTs who were deemed able to answer the questions and thereby facilitate developing findings that will begin to bridge this gap in the literature.
