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Tax Avoidance, Tax Evasion or Tax Incentives?

Whilst most people question the ethics of these large multi-national companies acting the way they do I think it is fair to say that in some, but not necessarily all, they are only taking advantage of tax incentives put in place by our own government. This would lead me to ask the question as to whether they truly are acting “unethically” or still acting within the tax rules and regulations to which all companies are governed?

Aside from the ethical side of this issue people argue the fact that their actions are taking away funds from our own government, which they are correct to argue. They are however still contributing to our economy through the employment opportunities that they provide to thousands of people within the UK. This does not however justify them not paying corporation tax when other companies do have to but are they really guilty of anything? Given the sentences that some of these large multi-national companies are faced with it would in many cases suggest that they were not guilty and would make me ask the question as to whether the penalties that these companies “offered” to pay were more of a publicity peace offering for assist public relations rather than being an admittance of guilt on their part.

We then move on to ask who is to blame, if it is not these multi-national companies is it our government? It is has been mentioned in the press several times by several individuals why don’t they just clamp down on such actions? This is a very naïve statement to make and unfortunately has no great potential without there being catastrophic consequences as we are forgetting that these are multi-national companies that are based around the world. If we were to close these tax “loopholes” they would simply move from this country and move elsewhere, taking the employment opportunities with them along with the PAYE and NI that they contribute to our economy every year.

The bottom line is nobody disagrees that we have a problem here but so does every other country around the world. In a large number of instances these companies are simply taking advantage of tax incentives offered by our own governments that the general public might neither realise and/or understand. If we close the door of these “loopholes” they would simply just look to move to another country so unless the world as a whole has universal tax laws and regulations there are few options open to the UK.

The day “universal tax laws” come into existence will most likely be the day us accountants are deemed to be interesting.

This was posted in Bdaily's Members' News section by Graeme Tennick & Co Chartered Certified Accountants .