Is MNC Tax Minimization Ethical? An Analysis of Legitimacy and Ethics

RUNNING HEAD: Ethics
ethics

Ethics 1
Is MNC Tax Minimization unethical, an issue that governments should be taking action on, or
legitimate conduct?
Tax minimization is an unethical practice which is followed by many companies and
organizations. The government must take a strict action on such issues. All the reputed
companies basically all those MNCs are highly involved in cases related to tax. They earn large
number of profits by developing unnecessary ethical practices and following them as well. Taxes
are reduced by investing which easily delays the amounts which is payable. It also minimize the
assets investments which have low rate of taxes. Further income is categorized among spouse or
other kids and the changes that takes place in income or the way any business is controlled or
managed and implemented. An individual can also save or minimize tax rates by managing and
controlling investment plans, employment income, and bonuses very carefully but it can also be
considered to be unethical (Hoi, Wu, and Zhang, 2013).
Today, it has been examined that reputed companies named Apple and Google uses such tax
minimization policies. They have grown successfully and ranked itself in US and UK
respectively. They are also highly involved in tax avoidation which the government must take
strict action. The government of US and UK must take strict action upon these two giant
companies. Despite of such issues, there were many companies who supported Apple and
Google. They stated that every company can maximize their profits using any practices and it
can be legal or illegal, do not matter. But there were many companies who argued against it by
saying it will uncover the laws and create hindrances in the legal policies. So, whenever a firm
decides to reduce taxes, it must be considered to be unfair, illegal and unethical (McGee, 2006).
Minimizing tax may be legal, but can it ever be ethical
Being a part of a good and sound governance, there are large number of multi-national
companies which aims to reduce or reduce their tax liability with the help of “tax planning”
which helps in the availability of these taxes for some specific purposes. Tax planning is referred
to a behavior which is compliant by nature but still there occurs a grey area between this and “tax
avoidance”. Minimizing tax or reducing tax includes financial and other many instruments and
arrangements (Miller, 2014). Tax evasion is denoted as paying tax in illegal form which can
sometimes be unethical too. Bending or molding the rules and norms and values of the tax is not
ethical and this do not comes under the spirit of fair law too.

Ethics 2
When government planned to cut the spending costs, then many people started suffering from it.
Any organization will not be able to neglect or say no to pat taxes which they are liable to pay.
Those who pays and those who don’t will develop a discrimination and partiality.
In the year 2012, a survey was conducted by Ipsos MORI in IBE. As per the information
gathered from survey, it was found that tax minimization was the second important issue which
each business or organization must take care of. Minimization of tax helps an individual or a
company to act vulnerable and develop greediness. It also aim at creating a hamper and damage
in the image and also reduces trust of public. Every customers or coworkers will reduce their
interest in such company because there will always be a greed nature beside company’s mission
and vision. Later, company will try to focus on the objectives set by it and work to achieve those
targets instead of developing all performance. Let us take an example of famous company
Starbucks and Amazon. They have faced many issues related to tax and policies. These both
companies were later boycotted and were vilified. They failed to maintain transparency and
reliability in all the activities they were involved in (Alstadsæter, and Jacob, 2013).
When there comes a time, a company decides to create and enhance the habit of paying fair taxes
for all the activities they follow, then they actually start helping society as well as country. It also
aims at creating and developing funds for sectors like education, health, infrastructure, and
development and training programs. Avoiding tax or minimizing it are branded very strongly by
several unethical practices and immoral activities which deregulates the overall integrity of tax
system. Increasing the value in order to help the shareholders of the company by reducing the
cost of tax is the most common issues that every company faces. It is legal but the techniques
behind minimizing it may not be ethical. Now, each company has focused on minimizing tax by
involving itself in many unethical practices which must be paid to the government in any form
(Minnick and Noga, 2010). Apart from the corporation tax, businesses must be praised and taken
care of and acknowledged too in order to contribute the economy of a nation. It is because
paying tax to the government will help to enhance the economic capabilities of a nation and also
helps any country to boost its income. Let us take another example of UK, there people pay
PAYE. PAYE is a national insurance contributions but in other many countries, they pay with
the medium of agreements. They use agreements to pay any infrastructure costs (Uslaner, 2010).
Paying a fair share