Sir Martin Sorrell, chief executive of global advertising group WPP, said the amount of corporation tax companies pay is "a question of judgement".
Sir Martin suggested that coffee chain Starbucks chose to pay a £20m royalty to the UK taxman because "doing good is good business".
[Starbucks had paid almost no U.K. corporate tax in 20 years, despite revenues of 3 billion, according to The Guardian.]
He said firms thinking long-term about their businesses do not do things that "upset consumers".
"All those contributions that you make to stakeholders are a question of judgement. There are the rules ... if then companies choose ... ... in terms of building their long-term brands to make a contribution to all stakeholders ... all credit to them."
Sir Martin was speaking on Radio 4's Today programme on Wednesday as WPP moved its headquarters back to London from Dublin.
WPP, which has 163,000 staff in 110 countries and is the largest marketing communications group in the world, moved tax domicile in 2008 in protest at the potential "double taxation" of corporate profits proposed by the then Labour government.
When the Coalition dropped the plans, Sir Martin agreed to return to London.
He also told the BBC in a wide-ranging interview that he expected WPP would see 2pc-3pc global growth in 2013, with "significant double-digit growth" coming from China.
However, he said businesses still faced a difficult trading environment and cash-rich firms remained reluctant to invest due economic uncertainty in the eurozone, China and the US.
On corporate pay, Sir Martin said consultation over his proposed £6.8m pay deal had been badly handled in 2012, but added: "If we want world leaders ... we have to be competitive."
More From Business Insider