Unit 3 Micro: Corporate Tax Avoidance and Reputational Risk
Three senior corporate executives were grilled by a Parliamentary Select Committee yesterday over the controversial use of transfer pricing as a way of legally avoiding corporation tax on profits made in the UK. Starbucks, Google and Amazon all have an incredibly strong UK presence in their respective markets but all are under fire for using legal, but undesirable methods to minimise tax payments in this country. US coffee giant Starbucks reportedly paid just £8.6m in corporation tax in the UK over 14 years, they are masters at using complex corporate tax codes to lower their tax liability.
How strong is the reputational risk at stake here? As a consumer, I use all three of these businesses most days and I could be persuaded to change my habits albeit reluctantly. Surely there is a case for a strong government response to identify and close legal tax loopholes that allow this to happen? Corporate tax avoidance is an issue that will not go away.