Tax avoidance in developing countries: evidence from MNCs in Sub-Saharan Africa

Olatunde Julius Otusanya, Jia Liu, Sarah G. Lauwo

    Research output: Contribution to journalArticlepeer-review


    Purpose – Mobilising domestic resources, in particular, taxation is key to unlocking the resources required for public investment in infrastructure, growth and sustainable finance. This study shares the perception that the tax arrangements of states and the transnational corporations (TNCs) of developed states have a critical effect on the development prospects of the less powerful states in developing countries.

    Design/methodology/approach – This paper locates the role of TNCs tax practice within the broader dynamics of globalisation and the pursuit of profits, to argue that the drive of TNCs for higher profits can enrich our understanding of why some TNCs engage in tax evasion. The paper used publicly available evidence to shed light on the role played by TNCs in tax evasion practices in developing countries.

    Findings – The evidence shows that tax havens and offshore financial centres, shaped by globalisation, are major structures facilitating the sophisticated tax schemes of highly mobile TNCs. The paper further shows that the corrosive effect of low- tax jurisdictions (‘tax havens’) continues to represent a major obstacle to a regulation of global economic relations which is required for maintaining sustainable social and economic development of poorer states.

    Research limitations/implications - The paper used publicly available evidence to illuminate the role played by TNCs in tax evasion practices in Sub-Saharan Africa

    Practical implications – The paper, therefore, advocates a radical reform that could minimize the attendant problems created by the activities of TNCs and the enabling structures that facilitate these practices.

    Social implications – Tax evasion has played a major role in causing serious damage to the economic and social landscape in developing countries. This in turn, has undermined social welfare and also investment in the public services, thereby eroding the quality of life and producing a decline in average life expectancy.

    Originality/value – The paper is a general review of literature and evidence on contemporary developmental issues
    Original languageEnglish
    JournalJournal of Financial Crime
    Publication statusAccepted for publication - 28 Jan 2022


    • Tax justice
    • tax evasion
    • tax haven
    • developing countries
    • poverty
    • growth and sustainable development


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