Tax avoidance is a legal act of reduction in tax to be paid to HRMC this can be done through

Tax avoidance has become a massive topic of discussion over the past few years, given the current global economic conditions and the cuts to the public sector by the government as a result. This led to increased anger from the public who perceive avoidance by many of the country’s wealthiest people in a time of austerity as greed. Perhaps the most notable demonstration of this anger can be seen in the actions of the group UK Uncut, who for the past year have been organising protests at shops owned by retail tycoon Philip Green who, as the poster boy for tax avoidance, paid a £1.2 billion dividend to his Monaco-resident wife.

But on the hand sometimes a government can introduce laws that can be favourable to the business environment for example low taxes for foreign investors, like apple, Google, Amazon and Starbucks all these are big companies that pay less tax here in the UK.

The Starbucks business commerce is trade, and the products include coffee drinks and coffee related products. Since the company has thousands of branches throughout the world, it is very convenient to “run in and out” and grab a coffee. Starbucks has a very loyal customer base and high profit margins. Through the loyal customer base and always being

The main objective of many companies is to minimize their tax obligations. Jeffers (2014) discussed the reason of why companies adopt tax inversion strategies. The researcher indicated that the income maximization is a major reason of companies attempting to reduce their tax liability (pp. 100-101). Tax inversion strategies provide companies an advantage to lower income tax rate. Today, U.S. corporations renounce its U.S. citizenship and move to low-tax countries. Companies that reincorporate oversees are not obligated to pay U.S. taxes on earning income (p. 99). Many countries implement tax competition strategies to attract and retain businesses. Well-known companies, such as Exxon Mobil, Hewlett Packard, Tyco, General Electric, PepsiCo, etc. take benefits of tax shelter opportunities overseas (p. 102). Other benefits of the jurisdiction abroad are flexible banking laws and simplified litigation processes.

Even with all these reasons on why corporate tax evasions are bad, there are still some arguments saying that the current tax system is fine as it is. These arguments usually derive from the fear of change. People are scared of the actions that these companies will take in order to counter act the new law set by the government.

also cause profits to be managed and inflated. For an example, Starbucks avoid paying tax in

In America, there has recently been a great deal of talk about tax policies which favor the rich and unfairly burden the poor. However, the benefits given to corporations make the advantages extended to individuals pale by comparison. By 'routing' profits through Bermuda, Puerto Rico and other notable tax havens, esteemed corporations like Microsoft, Google, and Apple have been effectively able to skirt the 35% corporate tax in America. Even for the profits recorded as existing in America, "through tax breaks and loopholes," the average amount these companies will pay upon their earnings is a mere 17.3% (The price isn't right, 2013, The Economist). Apple is particularly crafty in its ability to dodge state corporate taxes. Although the company is based in California, its official location is in Reno, Nevada, which has no state corporate tax rate, in contrast to California's 8.84 percent (Report: Apple legally avoids billions in taxes, 2012,CBS News).

Corporate tax avoidance matters, however, are difficult to analyze without consistent geographical disclosures. Unfortunately, there is a significant lack of

Many multinational corporations in the coffee industry have succeeded tremendously such as Starbucks. Each of these corporations has strategies that helped them continue to expand to nations of different cultures, ethnicities, governmental practices, and locations.

On the other hand, Richard Murphy, ‘anti-poverty campaigner and tax expert’, has stated that “those who argue that the matter is simple; avoidance is legal and evasion is illegal have forgotten how hard it is to tell what is and is not legal”. This is especially true because a lot of the tax avoidance schemes these large entities are involved in are such complex matters that even HMR&C struggle to unravel them. It seems like the Corporations are able to get away with it because, in an interview with Liberal Democrats Treasury spokesman, Vince Cable, he stated that ‘Banks and other Corporations use the finest legal brains money can buy to avoid tax, but HM Revenue & Customs is underpaid and overstretched, so it is far from a level playing field.’

The actions of multinational corporations (MNCs), which derive from their morally dubious goals, may be completely legitimate within a capitalist society. One of these actions that will be examined in this essay is the use of tax havens, as a way of avoiding higher tax liability. This paper will utilise the case study of Apple’s tax avoidance, in examining the legitimation of a company’s goal of profit maximisation, a goal that is against the moral/social consensus

Thus global companies become more competitive to other businesses and decrease the profitability of the market for their rivals, especially for national firms. Even though tax avoidance through charity seems to be moral, in fact, statistics provided by the Commission the charity represents that The Cup Trust spend only fifty five thousand pounds directly on charity and mostly these were small start-up children’s charities (Weakley, 2013). To add more, not the high rate of taxes itself forces businesses to resort to tax avoidance but the opportunity to do it legally. According to The Economist (2013), in recent years the corporate profits as a share of Gross Domestic Product in America were high, but the tax revenues of the government were one of the lowest in history. This paradox could be explained by the fact that there was a significant decrease in tax rates of Organisation for Economic Co-operation and Development (OECD) countries for more than seven percent for the last decade and they became considerably lower than in the United States of America (ibid). The reasons why tax avoidance theoretically may be justified were stated above. However, it was shown that in practice even if multinational firms pay to charity, which is obviously highly moral, they do it to reduce bills, which makes such operations morally wrong.

According to the definition of tax avoidance from subpart YA 1 of the Income Tax Act 2007, the meaning of tax avoidance has three aspects which are directly or indirectly change the scope of the income tax, the liability of the income tax which a person should pay in this year or the future years is directly or indirectly reduced, directly or indirectly avoiding, delaying, or reducing any liability to income tax or any potential or prospective liability to future income tax.

Tax Avoidance and the interpretation of sections BG 1 and GA 1 of the Income Tax Act 2007

Generally, tax evasion involves concealment of tax liabilities, such as failure to disclose all taxable income earned, and improper claims, such as deductions for expenses not incurred (Barkoczy 2015, p. 721; ATO 2015a). Due to its legal implications, tax evasion is considered as criminal offence and attracts pecuniary penalties and jail terms for the offenders (Barkoczy 2015, p. 722). Conversely, tax avoidance, although uncommendable, is not illegal. Tax avoidance typically involves taking advantage of concessional tax rates, shifting funds through several entities to minimize tax payable (ATO 2015b), and exploiting tax breaks (ACTU 2011). Some examples of tax evasion and avoidance practices can be seen from the following figure.