“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?1.2billion. 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 were increasing by approximately 11%. However, Starbucks was faced with a day of protest from anti-cuts activists. This was a disadvantage because it stated that companies who engage in tax avoidance are at risk of their reputation. Starbucks chief financial Officer and company officials. Starbucks’ chief financial officer and other company officials stated, “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. Starbucks made about?400m of sales in the UK in 2012 and didn’t pay corporation taxes. 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 of the?19 million in European tax revenues in 2016. Amazon paid just?15m in tax on its European revenues of?19 in 2016. It is easy to see how these companies dodge tax. They use legal loopholes and transfer money overseas to lower tax rates. Last but not least, they establish subsidiaries in countries that have favorable tax policies. They basically drive prices down to their benefit. Many large cooperatives are shifting the tax burden by avoiding tax. Governments aren’t equipped to penalize these “untouchables”. 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.
Because tax avoidance is a major problem in many countries, they have difficulty functioning properly and must provide for 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 they pay their fair share. The government should put the effect into place by 2020. This will help citizens and people. This will improve the country’s economic performance.
Multinational companies must stop tax avoidance. The government should provide social services to citizens in a way that is acceptable. All of this cannot be done in one day. The government will require money to develop.
