Role of reputational risk in tax decision making by large companies

Companies are increasingly expected to contribute to the tax revenue in countries they operate in. This article explores the relationship between reputational risk and aggressive income tax decision making in large companies, focusing on the role of the tax risk management system. It shows that few Australian companies use a comprehensive definition of tax risk that includes reputational risk and that shareholders do not play a significant role in the determination of a company's tax risk profile. This article contributes to an understanding of the relationship between reputational risk and tax aggressive decisionmaking and the limitations in current tax risk management systems in their ability to consider this relationship in development of tax strategy.