Ethical Dilemma Case Study No 4. by Amy Cumber https://padlet.com/amy_cumber/SMTFeb Ideas, comments and thoughts. en-us 2018-02-14 13:56:03 UTC 2018-03-19 10:20:46 UTC hello@padlet.com Consider the following questions:Is the ABC finance director doing anything wrong or illegal acting in this way and applying this flexible transfer pricing policy?Could this be considered as tax evasion or is it tax avoidance?Is it fair to minimise taxation in some countries to the benefit of others?If you were a tax inspector in a particular country and you observed a multi-national company which seemed to be highly profitable and yet was paying very little in taxes in your country, how would you feel about that?What about the bonus scheme which now appears to be inequitable and does not always reward the performance of the individual? amy_cumber https://padlet.com/amy_cumber/SMTFeb/wish/231478881 2018-02-14 13:57:07 UTC https://padlet.com/amy_cumber/SMTFeb/wish/231478881 Ethical Dilemma Case Study No.4 amy_cumber https://padlet.com/amy_cumber/SMTFeb/wish/231478978 2018-02-14 13:57:21 UTC https://padlet.com/amy_cumber/SMTFeb/wish/231478978 Response ben_craigie https://padlet.com/amy_cumber/SMTFeb/wish/232881195 The questions differ depending on the view taken either internally or externally, and the time frame considerations also play a factor.

i am not aware of the legalities of the FD's actions, as these are likely to change from country to country. however i would presume that the actions are on the edge of legal.

I'm certain that at the lest it would be considered as tax avoidance, and has been well published over the last 5+ years with major fallout and protesting against companies who have not paid UK tax for a number of years e.g. Starbucks, Apple, GAP etc.

I believe that the views taken by the countries and the local inhabitants would be very negative and would likely lead to a loss of revenue stream, negating the opportunity of profit.
the FD should act with integrety at all time compliying with local law.

the negative fall out could severely jeopardise the future opportunities of the company.

Bonus schemes will always cause an imbalance, as people will naturally believe they have performed the best, or that others had an easier ride.
Bonus schemes should be structured, easily undertstood and equally achievable for all, certainly should not be influenced by the FD massaging figures between bonus lines.


]]> 2018-02-19 11:27:37 UTC https://padlet.com/amy_cumber/SMTFeb/wish/232881195 Response https://padlet.com/amy_cumber/SMTFeb/wish/232893082 i) The FD’s role is to maximise tax efficiency within the boundaries of the law. Providing that the activities are not against the law i do not consider that the FD has done anything wrong.

ii) Providing that this is not breaking the law this would be tax reduction 

iii) Tax minisation is is common throughout the world and is well documented in the media. If there isn’t a law making it illegal it is fair.

Iv) There is a huge stigma attached to tax avoidance in the media, there needs to be strong consideration about whether this loop hole if it is legal will actually have lasting impact on the long term business plan. Is this just a quick win. Although the activity might be legal there needs to be consideration of how this is interpreted by the public, clients and subcontractors.

V) there is a simple fix to this issue, there needs to be a mutually agreed below the line adjustment in the Cost Plan to understand betterment / profit reduction brought about by tax laws. The bonus scheme needs to be linked to project performance, not the tax performance of a project. 


]]> 2018-02-19 12:17:08 UTC https://padlet.com/amy_cumber/SMTFeb/wish/232893082 In response to Case Study No. 3 https://padlet.com/amy_cumber/SMTFeb/wish/243357712 I do believe it would be perfectly acceptable to submit higher prices as I believe client would prefer that rather than being told ABC would not be bidding. At least it shows we still take the time to price this client's work and that their business is still valuable to us. My view is that it is perfectly acceptable to price higher knowing that if successful additional resources would be required and these may often come at higher price or if any internal resources do get freed up the margins would be higher and perhaps more scope to negotiate with client.  

Consequences may be that if no bid is provided some clients may well feel as if we do not value their works and hence remove us from future tender works or just not look favourable at future proposals from ABC.

If ABC was the client I think it would be better to get a range of bids in rather than only a few.  

First option remains legal and the second not.]]> 2018-03-19 08:31:32 UTC https://padlet.com/amy_cumber/SMTFeb/wish/243357712