Tax Evasion on The Example of Starbucks and Amazon

“Tax avoidance is the process of using legal means to reduce the amount of tax that is owed based on enumerated provisions in the tax law”.

Starbucks argued with the investors that the business had been profitable, even though the business had been reporting losses, just a few years ago Starbucks had reported sales of about £1.2billion in the UK and these reports where showing neither profit nor income tax. Starbucks released a statement stating about how the businesses were being profitable in the UK and they were happy with how everything was going. Starbucks earnings and revenues had increasing at about 11% although, Starbucks was facing a day of action from the anti-cuts demonstrators they had threatened the Starbucks brand and also the reputation of the company for corporate social responsibility it was an disadvantage just because it states that companies which are involved in tax avoidance will risk the company’s reputation, and in this case Starbucks had risked its own reputation by the anti-cuts demonstrators. Starbucks chief financial officer and the company officials said. ” They want to be good taxpayers and pay their shares of taxes; they don’t tax code; they are obligated to comply with”

Starbucks thought it would be a good idea to shift the UK operating profits to other taxing jurisdictions which worked to their advantage; In the 2012 Starbucks had about £400m sales in the UK alone and took no paying corporation tax. Financial transactions were made to the Dutch company in royalty payment and they made payments with high interest rates just to lend from other parts of the business.The company Starbucks trades with is based in Switzerland they sold coffee to Starbucks stores in the UK which will then be roasted by the company in the Netherlands, they reduced Starbucks tax bill she says that Starbucks had increased their cost and also reduced income reported in the UK it was being bought at a higher price of coffee to another Starbucks entity.

Their various companies which avoid paying tax another one of these big companies is Amazon. Amazon comes under fire from tax avoidance. The year of 2016 Amazon managed to pay just £15m in tax in the European revenues of £19. 5bn.Amazon didn’t get taxed three quarters of its profits because of its illegal benefits which they received from Luxemburg, it then comes on to say that tax avoiding companies will help overcome their competitors which makes it easier for them to secure control of the market which will be an advantage to them. When you look at these companies you can see how they avoid tax, what most of they do is that they use legal loopholes, then they transfer money overseas to other entities so that they can pay less tax and then lastly they will base their business in different countries that they can pay low tax because they are multinational tax will be deducted by locating subsidiary in a country that is favorable with tax policies.These companies create prices and they don’t even refer to the market price. They basically drive prices up and down for their own purpose and benefit. So many big cooperative companies are avoiding paying tax because of this pattern of tax avoidance shifts the tax burden. Governments don’t have the guts to punish such big “untouchable” companies.IN addition these companies that avoid paying tax still manage to use public services that will mean that they are putting too much pressure on the government and this negatively affects the service that is offered by the government. Tax avoidance puts a hug toll on the economy and the self-reliability of a nation. Companies should know that it is wrong to morally put such a huge negativity on the economy.

The government should cater to the need of the public citizens because of tax avoidance, many countries fail, and they struggle to function appropriately. It has gotten to the point where it's impossible to hear about a high rice in employment levels. This shows that the government is implementing budget cuts and they result in them borrowing just so that they can increase taxes on goods. Ana Arendar said, “comprehensive public is needed country by country reporting multination's to ensure they pay their fair share of tax” and the government should try and put the effect by the end of 2020.This can help the citizens and people of a country. By putting the effect this will help the economy of the country.

Tax avoidance is ethically unjustified and multinational companies need to start participating in the process. Government should start providing acceptable and social service to help the citizens of its country. This all can’t be accomplished in one day or night the government will need money for development.