ABSTRACT
This chapter distinguishes tax transparency from tax evasion, tax avoidance, tax aggressiveness and tax planning. We discuss the differences in various tax behaviours and activities of the company and provide definitions that help distinguish them from each other. Companies’ tax behaviour can be characterised by the degree of legality and ethics. Therefore, in classifying companies’ tax behaviour, we strive to answer the following questions: Is the behaviour legal and is it ethical? Does society see the behaviour as good or bad? We provide definitions and discuss differences between different tax behaviours. We define tax transparency as voluntary disclosure of tax-related issues by companies. We introduce our self-constructed metric for measuring tax transparency, including the disclosure of a firm’s tax policies, tax payments, regional tax distributions and other tax-related information. We define tax transparency in terms of a range of information a company voluntarily provides in relation to tax issues. We do not claim that there is necessarily a direct link between tax transparency measured in terms of the amount of information and the quality of information. To be tax transparent would require that good quality information is disclosed and that information is correct, relevant and useful to stakeholders.
