Ethical and sustainability options
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The aggressive tax avoidance by MNCs (Multinational Corporations) has a subject of attention at the present UK. Due to increased cases of avoidance there is need to take anti-avoidance measures to ensure that, the government does not lose money through such activities (Solomon, 2016).Various actions can be taken to stop Starbuck in avoiding paying tax in the UK. The prosecution is one of the most effective actions (Sweeney, 2015). HMRC can take legal action against Starbuck is they fail to come forward and sort out their tax dues. Although it is considerably challenging to get the actual figures, there is no doubt the company has been avoiding tax putting into consideration that they have reported losses in three consecutive years while still making significant figures in their annual sales.
The HMRC (Her Majesty’s Revenue & Customs) can also establish strict policies on BEPS (Base Erosion and Profit Shifting). Fundamentally, BEPS is a situation whereby a multinational company that prevents avoidance transfers profits away from the actual location where the sales activities took place. Over the years, the international tax standard has struggled to keep up with the pace of the changes that are associated with business operations especially now that most business is operating online (Institute of Business Ethics, 2013). Although the implementation of these policies may take a while, they will play a significant role in ensuring that Starbucks and other multinational corporation who are fond of avoiding tax comply with the taxation code of ethics.
Ultimately, one of the main reasons why most Multinational corporations find ways to avoid tax is because of the financial burden that is associated with taxation, especially for multinational company. Most organizations feel that the tax burden is too high to be accommodated in the books of accounts. In spite, the importance of being compliant to tax cannot be overlooked especially for a global corporation. By being, compliant put the company in a position to get enterprise optimized and efficient tax planning, consultations, as well as tax compliance services. In addition, compliant multinational organizations get enhanced the working atmosphere and enhanced efficiencies. Besides, the corporation is specially updated to understand the various legal requirements (Federal Taxes, 2016). In practice, it is considerably challenging to a company to operate in a foreign country without violating the rules because of the ever-changing regulations, tax laws, and rules. Compliant companies get services, which end up saving significantly to the company.
To sum up the discussion, tax avoidance by multinational corporations has been a contentious issue in the UK for over a decade. A considerable amount of money is lost annually due to tax avoidance. There is an accident in the tax avoidance or ‘Tax plans’ as recognized by most companies. Most organizations that are engaging in tax avoidance activities are deliberately carrying out the activity to deny the government revenue to carry out its public duties and responsibilities. It is the high time for the government and the relevant agencies to establish strict policies that ensure that multinational companies do not avoid tax. From the analysis of Starbucks tax avoidance and the various theories of business ethics and sustainability, it is plausible to conclude that it is ethical for companies to have a transparent and clear statement regarding their position on tax payment. Although most companies do address tax as a commitment or as an issue in the code of ethics, some such as Starbuck only declare a commitment to avoid tax evasion which abiding and illegal. Just like any other aspect of business, tax compliance should be made a corporate social decision by every organization. Business should realize the need to be part of the economic contribution to the country in which they are operating . Ultimately, consistent business ethics and sustainability increases positive public image which is critical for the going concern of the organization.