Business ethics: the tax evasion system of US companies

Résumé du document

In this essay, we will explain the main characteristics of the double Irish and the Dutch sandwich as a grey-zone but legal tax avoiding system and how, despite of this situation being fully compliant, it is to be considered as unethical.

Extraits

[...] As a conclusion, it is interesting to see that some trends in business ethics have already tried to address those issues. For instance, the FTSE group has decided to exclude “overly aggressive tax reduction policies” from its ethical fund. At the same time other forces are trying to reduce this behavior all around the world in order to ensure that this system will not be used in the future. The first is the civil actions leaded by associations and NGO's such as ATTAC which brings the light over these methods to the customers and the public. [...]

[...] State aid consist on the forbearance of a company by a state or by any public or public-financed entity. However, this help is not necessary in the forms of liquidity but can take many forms including the provisioning of human resources or, the lack of payment of taxes. This situation is, in fact, absolutely forbidden by the article 107(1) of the treaty on the functioning of the European Union in order to prevent the distortion of competition within the Eurozone. [...]

[...] In that case, the money is sent to another company in Ireland which benefits from two specificities of the Irish fiscal regulation. First, it is possible in this country to negotiate an agreement directly with the fiscal services in order to benefit from a much-reduced tax on profits. As a result of that, large American companies have negotiated a tax on benefits close to instead of the 12,5% for trading incomes and the 25% for non-trading incomes that applies to the other cases. [...]

[...] What is more, not only this system damages the incomes for the EU economies, but also the US federal budget. As a matter of fact, all the amounts transferred into Bermuda are not transferred back into the US and, as such, are not taxed by the US federal state. AS a result of this situation, the recently elected president of the United-States, Donald Trump, opened during 3 weeks a reduced tax window for those companies in order to allow them to bring back their cash to the US. [...]

[...] On a less liberal point of view, tax can also be seen as a social responsibility for a company. In fact, the payment of taxes can be seen as a fair share, paid by the company in order to give back to the community that allows this company to make those profits. However, what this tax avoidance systems tells us, is that the companies, despite of the “cooler” image they try to give us, is at the hand of investors such as their shareholders and less and less relate to their country or to any country. [...]