Amazon, Apple, Ethics and Corporate Tax – Business School Teachers Debate

A tech giant trying to hide questionable behavior from Margrethe Vestager is like an elephant trying to hide behind a cactus: it’s clearly exposed and subject to a good sting.

Marching with an army of pins and a megaphone, the EU competition commissioner was the chief exhibitor for global tech giants Amazon and Apple.

Investigating Amazon over a €250m tax loophole in Luxembourg dating back to 2003, and Apple over €13bn in Dublin tax arrears, she shed light on a debate over the ethics of tech giants and their mischievous approach to business. tax.

But are they really doing anything wrong?

“Companies have an obligation to their shareholders to minimize their costs,” says Nicholas Economides, professor of economics at NYU Stern Business School, “and tax is a big player in all of this.”

So why, if they are just fulfilling an obligation, is there such a problem?

Nicholas thinks that in some cases the responsibility lies with governments. The Irish government has done little to discourage Apple from exploiting a tax loophole.

“The tax issues with Apple in Ireland came from the way the Irish government drafted their contracts,” he explains, “Apple was paying almost no tax as a result.

“Therefore, the European Commissioner for Competition sued the Irish for this. I don’t think it is unreasonable to say to Ireland that if the corporate tax rate is set at 12.5%, it should remain at 12.5%.

With big tech companies hailing from America, it’s easy to see why the European Commission’s targeting of them could be misconstrued as bias – after all, in the minds of their CEOs, they have nothing hurt.

“But this is not an arbitrary attack on US companies,” says Nicholas, “I think the violations are serious and the EU position is legitimate.”

Mirko Hayat, Affiliate Professor of Law and Taxation at HEC Paris, accepted.

“Article 3 of the Treaty on the Functioning of the European Union gives the European Union exclusive competence to establish competition rules,” he explains.

“Competition policy is thus implemented through regulations issued directly by the European Commission. To be effective, the EU concentrates its supervision on the most important cases which cause serious distortions of competition.

“That explains why nowadays relations between very large companies and certain Member States are in the spotlight.”

Companies must work in harmony with their shareholders to make a profit, which is why they exist. But at the same time, the heightened exposure of malpractice could be a watershed moment in the realm of taxation.

The Organization for Economic Co-operation and Development (OECD) runs a program called Base Erosion and Profit Shifting (BEPS) to try to address the problem. more consistent international taxation.

The result will be Country-by-Country Reporting, a template for multinational enterprises (MNEs) to report each year in each tax jurisdiction in which they operate.

Emmanuelle Deglaire, lecturer in law and taxation at the University of France EDHEC Business Schoolbelieve that the international tax movement has changed more in the last decade than ever before.

“Recent revelations have changed the way people think about tax evasion,” she says. “Finally, the States are moving towards coordination to better understand and identify tax loopholes.

“There are something like 60 countries around the world implementing the OECD program right now, so I want to be optimistic. But companies no longer trust the States because they organize the redistribution of taxes as they see fit,” she continues.

“To really implement a more coherent policy, we need a society where companies learn to trust the state with their taxes. Everyone is trying to take advantage of this.

Luisa D. Fuller