Ethics and Governance

Document Type:Essay

Subject Area:Management

Document 1

Nonetheless, the benefits have come at the expense of the domestic countries that support their businesses without yielding a share of the gains inform of taxation. Taxation is the only way that business can contribute in financing government initiatives to provide an enabling environment for the business to thrive by maintaining law and order together with improving the state of social amenities. The practice of multinationals to utilize tax avoidance loopholes that allow them to shift their gains to tax havens with the countries where they operate are denied what should rightfully belong to them. Tax avoidance among multinationals through shifting the profits to a tax haven is unethical and fails to recognize the need to support a population that contributes to their success.

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Arguments against Tax Minimization by Multinationals The common practice among most multinationals to take advantage of the tax loopholes in justification of what they refer to as an initiative to reduce their tax liability is an unethical and classical case of robbing the people responsible for your progress. The withdrawals by directors of the shell companies in tax havens are made possible without detection radar of any illegality on their part. The secretive nature of most of the shell companies coupled with fake addresses and no express disclosure of the directorship has made the number of such transactions to grow. The tax havens have often attracted illegal activities around the world that have promoted the deteriorating state of the world and most societies.

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The development of drug and human trafficking activities, money laundering, mega corruption scandals among political leaders, financing of terrorist activities and most criminal enterprises is possible with the blessings of tax havens (Alstadsæter, Johannesen & Zucman, 2017). The level of suffering from the facilitation established by tax havens through offshore accounts and shell companies is an indication of the unethical nature of such engagements. The comparative advantage that comes from shifting gains to tax havens stands out as the inspiration behind multinational desire to profit from such a diversified taxation regime (Richardson & Taylor, 2015). Nonetheless, even though such loopholes exist, it is critical that multinationals turn to the Kantian perspective of categorical imperatives where they should understand the need to pay taxes is a moral obligation based on the greater good that it elicits on the population and for the benefit of their business operations.

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The opportunity to do business in such a country demands that they pay taxes diligently to help support the government rather than seek for the reprieve from tax havens where they should have set up their business if they so desired not to pay taxes (Bowie, 2017). The provision of essential services in social amenities through to providing national security and other public support services require funding that must be available and not exposed to the threat of lack of financing caused by a challenging economic environment. Taxation comes in handy as an accurate alternative source of income that will be implemented to affect all the businesses including multinationals that operate in respective jurisdictions around the world. The offshore companies around the world thrive on the benefits of globalization to defraud the global society of the rightful gain through either engaging in corruption and shifting gains to overseas accounts (Haberly & Wójcik, 2014).

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The benefits that come from such foreign transactions are not necessarily legal and fulfilling but most have a common underlying imperative of illegal transfer of funds and assets. The global business operations should seek to build consensus behind the need to discourage tax shifting in an effort to support to domestic economies where they are domiciled. The essence of contributing developmental courses through paying taxes and advocating for the state commitment to transparency together with objectivity goes a long way in eliminating tax havens and adverse unethical practices. Counter Arguments on Tax Minimization by Multinationals Despite the critical role played by taxation in enabling the government finance several public projects, there are those that believe business should be allowed to reduce their tax liability in a legal way.

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Business ethics requires that organizations take the duty of paying taxes as an important obligation in support of the development of society and service to all people. It is unfair to expect good infrastructure that would improve the business environment on one end but fail to contribute to such a course through paying taxes. Corporate social responsibility should not be an excuse to shift gains from business to shell companies across the world but organizations should commit to pay taxes and equally provide a mechanism for the concern of the local community. Unethical business practices among multinationals should be spoken against by government and consumers of their products to promote a culture of responsibility towards the good of the majority. Unfair businesses tendencies that involve shifting gains to tax havens fail to present the commitment of multinational to improve the lives of the people in a market they depend on for prosperity.

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