Introduction
The era of financial secrecy for multinational corporation (MNC) may have also ended just like the banks after the global financial crisis in 2008.
The governments across the world, armed with public outrages to financial institutions as the main cause of the crisis, decided to “clip the wings” of the banks by introducing many tighter new regulations regarding the financial market that, arguably, may derail the global economic recovery.
Not enough with the banks, the governments of major economies led by G-20, are now trying to go after taxes of multinational companies, which they alleged using tax planning schemes to avoid paying their “fair share” of taxes that can be used to finance economic development for the public, which facing deep spending cuts especially in many major economies such as United Kingdom (UK) and United States of America (US).
In the era of digital economy, the governments’, including UK and US, pursuit for such action is getting a momentum after they learned internet firms and consumer companies such as internet giant Google Inc, Amazon Inc and Starbucks Coffee racking up billions of US$ dollars of profit due to using complex tax schemes, from tax loopholes to tax haven jurisdictions, to avoid paying higher taxes in their home country of residence as well as to pay less taxes in the host country where they get the source income. The money usually reinvested by the companies to their units to expand the businesses.
Organisation for Economic and Cooperative Development (OECD), which become at the forefront fighter for taxes issues, introduced a project called Base Erosion Profit Shifting (BEPS), a term which refers to tax planning strategies that exploit gaps and mismatches in tax rules to make ...
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...omy”, OECD Digital Economy Papers, No. 216, OECD Publishing. http://dx.doi.org/10.1787/5k4c6tbcvvq2-en
Articles
Bergin, T, ‘Special Report: How Google UK clouds its tax liabilities’, Reuters News (London, 1 May 2013), http://www.reuters.com/article/2013/05/01/us-tax-uk-google-specialreport-idUSBRE94005P20130501 accessed 20 January 2014
___ ____, ‘Special Report: How Starbuck avoids UK taxes’, Reuters News (London, 15 October 2012), http://uk.reuters.com/article/2012/10/15/us-britain-starbucks-tax-idUKBRE89E0EX20121015 accessed 20 January 2014.
___ ____, “Special Report: Amazon’s billion dollar tax shield’, Reuters News (London, 6 December 2012), http://uk.reuters.com/article/2012/12/06/us-tax-amazon-idUSBRE8B50AR20121206 accessed 20 January 2014.
Websites
Timeline History amazon.com, http://amazongenius.com/timeline-history-amazon-com/ accessed 20 January 2013
The financial crisis of 2007–2008 is considered by many economists the worst financial crisis since the Great Depression of the 1930s. This crisis resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. The crisis led to a series of events including: the 2008–2012 global recessions and the European sovereign-debt crisis. The reasons of this financial crisis are argued by economists. The performance of the Federal Reserve becomes a focal point in this argument.
Many debates have been waged over the decades on what will be taxed, on who shall be taxed and how taxes are collected. Since the 16th Amendment was ratified in 1913, the debate has intensified, centering on how high to make the income tax rate. Most Americans were not concerned since the Amendment was sold to them as something that would only affect corporations and the rich. With ever increasing fervor these corporations created lobbyists to convince Congress to exempt them from some or all of the income tax. The big breakthrough in this was taxing the worker directly with payroll taxes during World War II. This method of collecting income tax was sold to Americans as temporary, but Congress has extended it indefinitely and the public has become used to it. The next few decades saw the debate revolve around creating tax breaks for individuals in an attempt to modify behavior or spending. This has resulted in over 67,000 pages of tax code and an entire industry devoted to tax compliance and evasion, with the unintended behavioral change of corporations and the rich parking their money outside of the United States in small island nations to avoid taxation. These offshore accounts are estimated to hold $10 trillion dollars, a number approximate to the national debt. The FairTax Act should be enacted because it eliminates all federal income taxes for individuals and corporations, eliminates all federal payroll withholding taxes, abolishes estate and capital gains taxes and repeals the 16th Amendment; thus eliminating the need for offshore accounts.
Our current system of taxation is a varied rate percentage based on different income brackets. Many say that it violates our constitutional rights through unequal taxation. Multiple deductions, loopholes, special rates, and a complex system of regulations all characterize our Federal Income Tax System, prompting many to question why it is still being used (Peters, 2013). The current system although bringing in over $3 trillion, taxes income multiple times, and includes the taxing of estate, labor, savings, and investments (National Priorities Project, 2013). The system itself is complex with over 20,000 pages of regulations, requiring a massive filing system, which is set up and maintained by an even larger IRS, requiring over $225 billion in compliance costs (Hall, 2001). One can be hard pressed to find an advantage in the current system, other than the fact that it provides the government with an enormous amount of funds, and it has...
Since 1996, when Amazon.com was incorporated it has never offered dividends to its shareholders (Nasdaq, 2015). The company’s dividend policy is not to pay dividends so that it is reinvested by seeking out opportunities and developing new products (Reeves, 2012, p. 17). In addition, the company’s net income has been fluctuating since 2004. According to Market watch (2015), the company’s net income in 2010 was US$1.15 billion, it reduced to US$ 631 million in 2011, it reduced further to US$ 39 million in 2012 before increasing to US$ 274 million in 2013. In 2014 the company’s net income reduced to US$ 241 million. The fluctuations in net income arise from strategic investments that have long-term returns. Stewart, (2014), notes that the high prices of Amazon.com’s shares are due to investors’ positive outlook about the company’s profitability in future. In this regard, the long-term bets have paid off the company resulting to investor confidence. Amazon 's net income for the three months ending in June 2015 was $92 Mil. Its net income for the trailing twelve months (TTM) ending in June 2015 was $-188 Mil (Bezos, 2015). In comparison to three of its top competitors, Amazon has the lowest net income.
The large-scale multinational financial giants are probably represented by the renowned investment banks such as Goldman Sachs, UBS, D...
It can discourage business investment and expansion, as additional profit is taxed at higher rates
Treanor, T.. (2010). Amazon: Love Them? Hate Them? Let's Follow the Money. Publishing Research Quarterly, 26(2), 119-128. Retrieved February 24, 2012, from ABI/INFORM Trade & Industry. (Document ID: 2377177581).
In today's society income taxes are something in which almost everyone is familiar. However, the tax law and general purpose of income taxes is something in which the general society gives little thought. In addition, few tax preparers are aware that differences exist between the Generally Accepted Accounting Principles (GAAP) and tax accounting, not to mention the ramifications of avoiding or evading to proper complete the reporting of income taxes. This paper will discuss the objectives of modern tax law, the differences between Generally Accepted Accounting Principles (GAAP) and tax accounting as well as the differences between tax evasion and tax avoidance.
The use of taxes is one of the government's favorite ways to make its presence known in the economy. While this method seems blatantly obvious, many of the ways the government uses the money collected by taxation is not. Some of the money it takes is used to fund other programs designed to "protect" consumers and to "create" jobs. Be...
A tax haven is a country that offers foreign corporations and individuals relatively low corporate and income tax rates, with a politically and economically stable environment. Some tax havens are Switzerland, Hong Kong, Bermuda, Ireland, and the Cayman Islands. The United States government has been fighting against the movement of corporations because it is not collecting taxes from these corporations that it could have used to reduce government debt. However, corporations have found loopholes that exempt them from United States tax laws. Companies are moving their headquarters across seas for tax benefits to keep their shareholders content. The United States government needs to reduce its corporate tax system so the country does not lose more companies, jobs, and money to foreign entities.
Weiss, M.A. (2009) ‘The Global Financial Crisis: The Role of the International Monetary Fund’, CRS Report for Congress.
One of the major corporations today that is trying to control a large portion of the supply of coffee is Starbuck. Starbucks Corporation is the leading retailer, roaster and brand of specialty coffee in the world. Starbucks purchases, roasts, and sells whole bean and rich-brewed coffees, espresso beverages, cold blended beverages, an assortment of food items, coffee-related
Treanor, T. (2010). Amazon: Love them? hate them? let's follow the money. Publishing Research Quarterly, 26(2), 119-128. doi:http://dx.doi.org/10.1007/s12109-010-9162-7
When was the most recent time you purchased something from the world of Amazon.com? Amazon is a staple provider and supplier for many people around the world, who are able to order a variety of products all in one place. Just this semester, my professor of my photography class assigned us to all order our necessities for our class via Amazon.com because they WILL have everything we need in one website or store. Amazon chooses to make the world their target market, because their goal is to have the biggest selection for every one of their customer. Currently, Amazon sells to 33 countries, including United States, India, South Africa, Germany, and Australia. This paper will detail the mission and history, financial and world sustainability, consumer
Warwick J. McKibbin, and Andrew Stoeckel. “The Global Financial Crisis: Causes and Consequences.” Lowy Institute for International Policy 2.09 (2009): 1. PDF file.