Critical Analysis of Ethical Issues on Tax Avoidance

Introduction

A tax is a mandatory money related charge or some other duty forced upon a citizen by a legislative association to support different open consumptions. An inability to pay, alongside avoidance of or protection from tax collection, deserves a law. Taxation is the framework by which an administration exacts or forces charges on residents and corporate elements to fund its costs, which help in things like Healthcare and Education.  They impose taxes on Businesses and any form of revenue-generating activity. When we think of tax, there come some ethical issues that affect both the individual and the corporates at large. We have a case which involves CENTaur Plc and its employee Pat as well as how the management of the company. For a better and efficient understanding of this issue, we will analyze various articles that shed light both in support and against Ethical Issues on Tax Avoidance.

A business’s main aim of being operation is all about maintaining profits clients and being able to compete (CENTaur and BLOLox) well in the market share. Business is also expected to maintain corporate responsibility and sustainability. The concept of sustainable development has gotten a lot of consideration in the most recent decades. It alludes to manageability at a hierarchical level that includes ecological, social, and financial outcomes (Arrigo, 2013). The managerial hierarchy is seen as Pat is the department head. He has a boss who is the Vice President of the CENTaur Plc one, Mr. Max. The expanding strain and pressure to meet supportability necessities have pushed a few organizations to create reasonable projects to screen and survey their procedures. An example of this is seen from the need of CENTaur Plc to have a successful product launch into the market. Because of the pressure the business faces, they are evasive for paying taxes. It becomes unethical and raises a lot of issues both to the business and its surrounding environment.

The taxes are fundamental in the measurement of a company or business relationship and commitment rather than avoid it (Dowling, 2013). Pat is not happy with the idea of using the advantage of the loophole in the Legal Legislation, which will allow the company to reduce its tax margin by millions hence escaping their Social obligation the Corporate has even if Nicky is in support of. Organizations seeking a supportable way reveal information and data about their financial, social, and natural execution and manageability programs in openly accessible reports (Becchetti, Giacomo, & Pinnacchio, 2008). Social obligation suggests, on the one side, choices prompting more significant expense of work and transitional yield, however, may, on the opposite side, improve inclusion, inspiration, and recognizable proof of the workforce with organization objectives with constructive outcomes on efficiency. A blending treatise about the apparent threat among nature and business (Hawken, 2010): remedial financial matters include three significant parts: updating and assembling items in imaginative ways, changing and re-teaching the buyer, and re-establishing the connection between business and government.

For sustainability and responsibility to be effective, there is the need to have Business Ethics. There are various theories that can be employed in order to make this more effective. It becomes the duty of the leaders in the company to ensure that everything has been followed. Max is seen to be unethical in many ways as he does not care what happens to the corporate as his time to retire is near.  The new spotlight on ethics in corporate America is excellent, yet it’s long on words and short on instruments (Bagley, 2003). Ethics will assist organizations with directing their business in manners that lessen the negative effect of corporate choices on those least ready to endure it (Hartman, DesJardins, & MacDonald, 2018). This is true as part saying the new implementation in his department will have a marginal negative effect on the output of the product, with the benefit being not clear.  As anyone might expect, that innovative upset has carried with it the same number of difficulties as circumstances (Editors, 2008). A considerable lot of these difficulties bring up moral issues, especially as this innovation impacts representative and customer protection. Hence an intelligent leader is preferred by the workers and the client of a certain business. The position Pat is in is quite difficult as he is expected to do the wrong thing why he knows well is bad at the same time he doesn’t want to lose his job.

Ethics are, at times, confusing and puts one in a difficult position, but one has to do the right thing always. It is the worker of a leader to do what best at all times. This is not always the case as they may drive the leaders in the making of wrong decisions, which are unethical when making sure they are doing what’s best for the business or meeting their personal gain. The employees may be forced to report, such as a case to the relevant authorities (Miceli, Near, & Dworkin, 2009). For better leadership regarding the abiding with the regulations regarding tax, there the need to incorporate leadership, communication skills, the basics of human resources management, and ethics (Linda Klebe Treviño, 2003). Recent business history has shown without question that separating business from morals and qualities runs colossal dangers. Nicky knows very well that the idea of implementing the new process is wrong but still recommends it.

For the corporate world to be monitored and supervised that they hold their end for fighting tax avoidance. This calls for the formation of good governance of the corporates through the development of theories, codes, and Legislation. Recent business history has shown without question that separating from business from morals and qualities. The new changes made in the tax law have made it possible for CENTaur Plc to avoid paid its taxes in full. The strategies that some large worldwide companies used to decrease their duty obligation have gone under expanding open examination, legislative investigations, and universal responsibilities planned (West, 2018). Rules and standards of corporate administration are significant parts of the structure for productive market economies. We can characterize corporate administration in an assortment of ways, mostly, it includes the components by which a business venture, sorted out in a restricted obligation corporate structure, coordinated and controlled (ECGN, 2002).

Max doesn’t want to be involved in any decision regarding the saying he is operational, not an MBA, also quoting his retirement. He represents the first is administration, and the second is conformance, which will be led by Pat, who is next in line of succession if he does the wrong thing (Aguilera & Cuervo‐Cazurra, 2009). The administration should have good control measures, which will help in meeting the set-out goals.  Associations that work for benefit have organized improving investor esteem. Pat is forced to think about his own benefits, which will come after the Corporate has avoided taxes as he will be thinking about the impacts of their business on different partners (Raelin & Bondy, 2013). They show adjusted investor society premiums to be much of the time undermined, falsely proving the second layer suspicion that means of money can adequately advance cultural advancement money-related rewards and allows (Fox & Lorsch, 2012).

The ethical theory which is there is made available for the purpose of making corporate leadership better. We have corporate Social Responsibility and the Governance and Compliance Theory. After analyzing the case study well, Pat is both ethical and unethical when it comes to avoiding taxes. He is in a difficult position where he is considering a lot of variables, his work and future, and committing a crime. CENTaur Plc is unethical as it is forcing its employees to commit a crime and abandon it Social Corporate Responsibility for the sake of making more money and competing unfavorably. Nicky is well informed and aware of the laws but still recommends for the wrong thing. Max, on the other hand, is unethical as he abuses his position as Vice President so as not to do his duties.

References

Aguilera, R. V., & Cuervo‐Cazurra, A. (2009). Codes of Good Governance. Corporate Governance: An International Review, Vol 17(3).

Arrigo, E. (2013). Corporate responsibility management in fast fashion companies: the Gap Inc. case. Journal of Fashion Marketing and Management, Vol 17(2).

Bagley, C. E. (2003). The Ethical Leader’s Decision Tree. Harvard Business Review, Vol 81(2.

Becchetti, L., Giacomo, S. D., & Pinnacchio, D. (2008). Corporate social responsibility and corporate performance: evidence from a panel of US listed companies. Journal of Applied Economics.

Dowling, G. R. (2013). The Curious Case of Corporate Tax Avoidance: Is it Socially Irresponsible? Journal of Business Ethics, Vol 124(1).

ECGN, E. &. (2002). Comparative Study Of Corporate Governance Codes Relevant to the European Union And Its Member States. EUROPEAN ASSOCIATION OF SECURITIES DEALERS & EUROPEAN CORPORATE GOVERNANCE NETWORK.

Editors, P. R. (2008, August 25). Men or Women: Who’s the Better Leader?-A Paradox in Public Attitudes. Retrieved from Pew Research Center: https://www.pewsocialtrends.org/2008/08/25/men-or-women-whos-the-better-leader/

Fox, J., & Lorsch, J. W. (2012). What Good Are Shareholders? Corporate Communications.

Hartman, L., DesJardins, J., & MacDonald, C. (2018). Business Ethics: Decision Making for Personal Integrity & Social Responsibility.

Hawken, P. (2010). The Ecology of Commerce: A Declaration of Sustainability. Engineering.

Linda Klebe Treviño. (2003). Managing Business Ethics- Straight Talk About How To Do It Right 1.

Miceli, M. P., Near, J. P., & Dworkin, T. M. (2009). A Word to the Wise: How Managers and Policy-Makers can Encourage Employees to Report Wrongdoing. Journal of Business Ethics.

Raelin, J. D., & Bondy, K. (2013). Putting the Good Back in Good Corporate Governance: The Presence and Problems of Double‐Layered Agency Theory. Corporate Social Responsibility Issue.

West, A. (2018, December). Multinational Tax Avoidance: Virtue Ethics and the Role of Accountants. Retrieved from https://ideas.repec.org/a/kap/jbuset/v153y2018i4d10.1007_s10551-016-3428-8.html