European heads have turned lately to tax avoidance amongst big companies. A while back, Starbuck’s caused a stir and more recently, using the tax relaxed Irish base, Amazon has defended its stance – also called into the spar are giants Google and Apple (Reuters).
Closer scrutiny lends a hand of legal support to these giants, as complex tax rules are admittedly not broken, but certainly stretched beyond their usual limits. Some estimates suggest that Europe lose up to one trillion Euros a year through ‘creative accounting’ – that is an amount almost equal to twice the staggering annual budget deficit across the whole EU.
The USA’s tax policy is not without fault in this scenario. A report by accounting analysts J.P.Morgan found that up to 67% of Apple’s U.S.A. business cash is stored overseas, forming sizeable ‘off shore’ accounts. This is perfectly legal. The policy of such taxing means that only repatriated accounts are liable to tax; and with the U.S. boasting one of the highest corporate tax rates, yet with the one of the lowest corporate tax revenues amongst OECD countries, policy makers take note.
Transparency and cross-boundary communication are key to tackling tax avoidance and with the G8 summit looming; expect Government Leaders to push hard for accountability and tougher regulation. Bear in mind, the Swiss banks are part of the mix here too. Here we see a real chance for the Organization for Economic Co- Operation and Development to don bigger boots and ensure fuller accountability and accounting.
Media exposure should be enough, not only to ram home to the consumer the ethical dilemmas of purchasing from, and therefore funding, billion dollar companies who avoid ‘full dues’, but to call to account nervous corporate leaders.
The charity, Oxfam, added to the vitriol by claiming the world is deprived of around $150 billion in lost revenue annually (over £5.2 billion in the UK alone), a figure which could end deprivation globally, and then some. With such mounting evidence of big-business-trust gone bad, it is likely to be hard to justify avoidance legally or morally.
The Fat Cat image, with certain Fortune 500 CEOs claiming they are “fair” and “humanitarian” individuals despite it all, goes little way to appeasing Chancellors or customers. There is a good deal of repair needed; image consultation and re-strategizing business efficacy and tax honesty being certain goals, through choice or otherwise. The culture of mass branding, and individuals like the late iconic Steve Jobs becoming virtual celebrities can overwhelm accountancy and social liability; ultimately responsible, CEOs need to temper status with propriety and comply with inevitable future strengthening of tax laws and application. Companies exist within the business realm, and the sum of their parts are not lesser than the whole; taxation included.
