Year 12 student Inaam Bawa takes a look at how businesses use gaps in the law to maximise their profits
Businesses are run to maximise their profits. This means that, when taxes and legal limitations threaten to reduce their earnings, businesses begin to reconsider their strategies. Therefore, many companies turn to “loopholes”, gaps or ambiguities in legislation, as a strategic tool.
Whilst these practices aren’t actually illegal, they often raise ethical concerns and are frowned upon by the public. This article will explore how loopholes shape strategies in three different ways: international tax avoidance; domestic regulatory exploitation; and the morals involved in the flexibility of the law. Using case studies and various sources, I will argue that although loopholes may offer short-term benefits to businesses, they ultimately reveal the need for smarter laws.
One of the most prominent examples of how legal loopholes shape business strategy is seen in international tax planning. Some multinational corporations exploit the differences in national tax codes to move profits from high-tax countries to low or no-tax jurisdictions. For example, Google utilised a mechanism known as the “Double Irish with a Dutch Sandwich” to transfer billions in profits from Europe through Ireland (and the Netherlands) to Bermuda. In 2017, Google moved roughly 16.9 billion ($23bn) using this to process. Though entirely legal at the time, this strategy drew sharp criticism. The European...
Tribune News Editor [email protected] TWO Bahamians were indicted in separate US federal districts last week on charges linked to passport fraud and false claims of American citizenship, acc...