Every year developing countries lose billions of dollars through tax evasion and tax avoidance by TNCs, which are some of the largest tax payers in the world. A great portion of developing countries’ already scarce revenues is vanishing without the population benefitting from the human rights obligations its states have undertaken by becoming part of human rights conventions. Tax revenues are an essential source for evoking resources that enable the government to promote the realizations of human rights, yet taxation has received little attention compared to other financing issues such as trade, aid and debt. While the focus of many has been on increasing aid flows from developed to developing states, too little attention has been paid to the much larger flows in the other direction. Many companies advertise their philanthropic contributions to the societies in which they operate, such as building a school in a developing country. However, it becomes clear that something is wrong when the same companies avoid paying taxes that could build 50 schools in the same country. There are numerous aspects which are of great importance on the agenda to create a more efficient and just tax system, such as strengthening tax authorities and financial administration, combating corruption and bribery and reducing the informal economy. Nevertheless, this paper will focus on TNCs tax policy, not because the other topics’ less importance, but because of the scope of this thesis.
Recently, an increasing number of NGOs have reported on TNCs’ extensive tax minimization and its harmful impact on the societies in which the corporations are operating. However, few have looked at tax evasion and tax avoidance as a human rights concern. The legal human rights responsibility of TNCs is controversial and this thesis will therefore examine whether prevention of extensive tax minimization is, or whether it should be, incorporated in this responsibility. Because human rights law still falls short of implementing regulations on TNCs regarding these issues, this thesis will address how efforts to hamper extensive tax minimization is demonstrated by the CSR agenda, where human rights is an important component.