“Tax Avoidance” refers to the use of legal tools to reduce tax owed. It is done using the provisions of the tax law.
Starbucks claimed that the company was profitable despite reporting losses. Just a few years back, Starbucks reported UK sales of approximately?1.2 billion. These reports did not show income tax nor profit. Starbucks issued a statement that stated how profits were increasing in the UK. They were pleased with the results. Starbucks earnings and revenues increased by 11%. But they were faced with an anticuts demonstration. These demonstrators had threatened Starbucks brand and its reputation for corporate social responsibilities. Starbucks chief financial officers and company officials spoke out. Starbucks’ chief financial officer and other company officials said, “They want be good taxpayers; they don’t tax code; it is their obligation to comply with.” Starbucks thought it would make sense to shift UK operating profit to other taxing jurisdictions. The 2012 Starbucks sales were approximately?400m. They paid royalty payments to the Dutch company and made high interest rate payments to Starbucks to help them reduce their tax bill. Starbucks claimed that this had caused an increase in Starbucks’ cost and reduced its income.
There are many companies that avoid tax. Amazon is one such big company. Tax avoidance is a major problem for Amazon. Amazon paid just?15m tax on its European revenues in 2016. Amazon paid just?15m in tax on its European revenues of?19 in 2016. These companies are able to avoid tax by using legal loopholes. They then transfer money overseas to other entities to pay less tax. Finally, they will base their businesses in countries where they can pay lower tax. They basically drive prices down to their benefit. Many large cooperatives are shifting the tax burden by avoiding tax. These big companies are not punishable by governments. Tax avoidance is a big problem for the nation’s self-reliability as well as its economy. It is morally wrong for companies to place such a negative effect on the economy.
Tax avoidance has caused many countries to fail, making it difficult for them to function effectively. The government should be able to meet the needs of their citizens. It’s now impossible to hear of high levels of rice employment. This is because the government is cutting budgets and borrowing to increase goods taxes. Ana Arendar stated that a “comprehensive public” is required for each country to report multination’s in order to ensure that they pay their fair share. The government should put the effect into place by 2020. This will help citizens and people. This will increase the country’s economic strength.
Multinational companies should be participating in tax avoidance. The government should provide social services to citizens in a way that is acceptable. It is impossible to do this all in one night. Government will require funds for development.
