Summary
The article titled “Amazon’s Shifting Tax Story” describes how the e-commerce company Amazon has moved its assets overseas in order to pay less taxes in the United States, where it is headquartered. In 2005, Amazon, a company since the early 1990s, moved its technology assets to the small European country of Luxembourg. Luxembourg is a “tax haven” because the revenue that the branch collects there is tax-free. Amazon pays royalties to Luxembourg in order to save billions of dollars in taxes that it would normally pay if its operations had remained in the United States. Amazon is not the only large multinational company to do this; Apple, Facebook, and Merck also lower their overall bills by shifting around their offices to foreign tax havens.
Key Points
This article identifies an issue of current relevance in regards to business ethics. Ferrell, Hirt, and Ferrell (2015) describe business ethics as “principles and standards that determine acceptable conduct in business” (p. 24). By shifting its operations to overseas tax havens, it is possible that Amazon is in violation of ethical business standards. Another concept that this article touches upon is social responsibility. Social responsibility is related to business ethics, because business ethics are intended to uphold a high degree of social responsibility, which Ferrel et al. (2015) defines as “a business’s obligation to maximize its positive impact and minimize its negative impact on society” (p. 24). By this definition, a company is bound by its responsibility to society to report its income to tax-collecting agencies accurately, without making attempts to be deceptive, and to pay taxes in the full amount owed, because taxes are used to maintain public services and infrastructure. When a company fails to pay its taxes, it takes money away from the community that supports it and which it is supposed to serve. When Amazon engages in illegal activity by committing tax fraud, like the IRS insists it has done, it violates internationally agreed-upon standards of business ethics and social responsibility.
Finally, the last concept from the book that this article relates to is the concept of bribery. Bribes are money or special favors that an organization pays to another entity in order to win favor and influence a decision. The royalties that Amazon paid to the country of Luxembourg can be seen as a form of bribery. Amazon gave Luxembourgian officials a bribe in order to get their help in conducting business in Europe without having to pay taxes.
In conclusion, the article discusses an area of ethical concern regarding the business conduct of the e-commerce company Amazon. Amazon has been suspected of fraudulently reporting its revenue to the IRS in order to pay less taxes. The company has also shifted its technology branch to a European country so it can do business tax-free, saving it billions of dollars, and possibly engaging in bribery to do so. By using deceptive practices in order to pay less taxes, the company has violated the standards of social responsibility and business ethics.
Reference
Ferrell, Hirt, Ferrell. (2015). Business Ethics and Social Responsibility. In Business (4th ed., pp.
22-55). New York: McGraw Hill Education
