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In my recent article in the eJournal of Tax Research I examine, from a black letter law viewpoint, the link drawn by human rights advocates between what is referred to as taking abusive tax positions by large Australian and other multinational corporations and human rights, and conclude there is no link between the two.

Such links are based on the contention that these entities breach their human rights obligations by seeking to minimise their tax liability as much as possible and thus deprive governments of the means to provide services like poverty alleviation, health, education, housing and many others.

The journal article demonstrates that all taxpayers must only pay those taxes mandated by law as taxes can only be imposed by legislation. There is no obligation to pay any tax unless there is statutory authority to levy such tax.

A subjective matter

The term ‘abusive tax position’ as used by human rights advocates includes criminal conduct (criminal conduct as specified in the Crimes Act 1914), tax evasion (intentional criminal conduct designed to limit or not pay taxes), tax avoidance (a breach of the specific or general anti-avoidance rules contained in the tax laws), and embarking on schemes that appear to be in compliance with the tax laws but do not result in the multinational corporation paying what is referred to as a fair share of taxes.

This last phrase (fair share of taxes) is meaningless. The proponents for a link between tax and human rights tend to a subjective meaning for these terms, especially in regard to ‘avoidance’, that has no relationship as to how the tax laws or the courts or the Australian Taxation Office in fact construe avoidance. In Australia, there are objective factors to be met before a corporation falls foul of the anti-avoidance rules and particularly the general anti-avoidance rule contained in Part IVA of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936).

By turning to a consideration of the human rights obligations of corporations (these include economic, political, social and cultural rights), I conclude, after an extensive examination of the law, that these obligations are limited to those with whom the corporation has a direct connection, or those for whom it voluntarily assumes liability (see section 3.2 of the journal article). As the connection becomes more distant the obligation becomes smaller, until eventually it may be non-existent. If the state does not legislate enforcement mechanisms, claims for breaches of human rights are mere rhetoric.

Problems around the link between tax and human rights include the assumption that whatever additional tax is recovered by governments will be utilised to further human rights, and that not paying more tax than the law requires is in some way a breach of human rights or the tax obligations of large corporation. This assumption is mistaken. Governments have an absolute discretion generally to determine how they spend the tax revenues collected.

No breach of an obligation

I then consider whether these large corporations owe a duty of care to individuals, not to take an abusive tax position. By examining the case law, I conclude there is no special relationship between any large corporation and the community or any individual where it can be contended the corporation has assumed an obligation –for example, to eradicate poverty. On this basis, ‘there is no breach of an obligation, nobody at fault, nobody who can be held to account, nobody to blame and nobody who owes redress.’

In the article, I also review the proposition from a tax perspective. No discernible link could be found between tax and human rights. To the extent large corporations did not pay as much tax as the legislature anticipated, the problem in the past appears to be in part the inability – or possibly, the unwillingness – of governments to legislate tax laws that capture the income sought to be taxed, and in part the inability of the regulator to properly enforce those laws that have been enacted.

As a means of bolstering the efficacy of the anti-avoidance rules in their application to multinational corporations, the Australian government has recently enacted  the Multinational Anti-Avoidance Law (MAAL) and the Diverted Profits Tax Act  (DPT). Time will tell if these will have their desired effect.


The conclusion reached is that there is no legal link between taking abusive tax positions and human rights. It is the function of governments to impose laws by which tax is levied and enforced.  If these laws do not exist, no liability to pay tax exists. Allegations of a link between tax and human rights would appear to be much ado about nothing.

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