Business Violations Taxation and Ethics

Question: Discuss about the Business Violations for Taxation and Ethics. Answer: Introduction: Business is define as moral or immoral from the stand it takes in respect to taxation and ethics. Taxation comes under the ambit of ethics and hence, business that has a strong reporting mechanism and files its tax as a concerned entity is treated with dignity. With the due passage of time, there has been a major increment in the tax avoidance rules that is hurting the sentiments of the government. Any activity done to suppress tax makes the business immoral. Morality consists in proper reporting and paying taxes. One can judge a business from the policies it undertook in governance and ethics that includes the part of taxation (Moffett et. al, 2011). However, it is evident that financial accounting is an ethical ground and there are no ways to eradicate it completely from the system. The accounting concepts need to be adhered when it comes to reporting of the financial statements. Accounting plays a dominant role in a wide range of manner. It is difficult to establish an organization structure or strategy without it. However, with the due passage of time, it is noted that the tool of accounting is used in a manner to suppress the amount of tax and to show the figure of tax below a certain level. The above article clearly projects the strategies used to show a lower tax level (Murphy, 2012). From the above, it can be stated that the current business is immoral because the transparency of the tax system is missing in Gina Rinehart and Andrew Forrest. It is a common parlance that the loopholes in the system of tax are use to suppress the tax amount. In the case of Andrew Foresst it is seen that two different approach is used in Fortescue Metals Group and his own business Tattarang. However, the ATO figure projected something different that states the related entities have been merge into the tax of Tattarang that could not be include in the accounts of ASIC. This is immoral in nature because it projects the limitation of the tax transparency. The main highlight of this article lies in the fact that the company is reporting only a certain amount of the income. Such strategies project the development in the accounting policies and firms. This project that the loopholes in the system of tax is used in an effective manner (Ingram, 2016). Each of the big 321 companies are a separate part of larger group that contains various companies, trust, individual, etc. hence, it is clear from the scenario, that the real tax payment is suppressed and business have a general tendency to evade it (Martin, 2016). The tax transparency report projects that a huge sum of $1.6 billion in terms of tax is still payable by the entities that are associated. Hence, it is clear that the method of reporting and non-reporting entity is used. Tax payable is mandatory but the system suffers a drawback as the companies tries to avoid it through shell companies or includi ng many associated which ultimately becomes a big problem (Ingram, 2016). The tax transparency report projected that $1.6 million were payable by the associated entities that means a huge sum is pending to the government and this is done through the introduction and addition of separate entities. Associated entities are present to conceal income and the article projects that 98 companies do not pay tax at all. However, it is upon the whims of the company to expose their related entities. Related entities must follow a reporting and do the necessary act that is required to comply with the regulations. However, little is done in this regard and there are various scandals that have really shook the entire corporate world. The loopholes of the tax exploited so that the reporting of the tax is lower. The onus is entirely on the companies to project the best figure as it adds to the revenue of the government in terms of tax. The concept of tax avoidance is prevalent in the system from a long time and with the passage of time, it has come to the forefront (Murphy, 2008). As per the estimates and report, it is a glaring fact that the concept of related entity has added a lot of burden to the government revenue. Multinationals get a relief from the basic responsibility that is social in nature, to pay tax and any form of suppression of tax is immoral in nature. The consequences are negative and hen ce, it adds to the pressure of the government. In short, it can be define as a scandal. References Ingram, D 2016, Examples of Ethics Violations in Business, viewed 12 September 2016, https://smallbusiness.chron.com/examples-ethics-violations-business-25673.html Martin, P 2016, Tax avoidance schemes and the role of accountants, viewed 12 September 2016, https://www.kennedyslaw.com/article/tax-avoidance-schemes-and-the-role-of-accountants/ Moffett, M. Stonehill, A. and Eiteman, D 2011, Fundamentals of Multinational Finance, Cambridge USA Murphy, R 2008, The Missing Billions: The UK Tax Gap, TUC. Murphy, R 2012, Why are they increasing the tax gap?, Public and Commercial Services Union, vol. 2,no. 1, pp. 10-22.