During the 2013 G-20 summit, which took place from September 5-6, the issue of corporate tax avoidance was discussed among the world’s leaders. There was a growing concern among tax justice commissioners that corporate executives were avoiding taxes with the intention of increasing profits and shareholder returns. As a result of this ongoing discussion, the prestigious law firm Farrer and Co. issued a statement that reads: “It is not possible to construe a director’s duty to promote the success of the company as constituting a positive duty to avoid tax.” As Milton Friedman once said, it is the responsibility of a business to partake in activities that will increase its profit without breaking any laws or violating any ethical principles. Several executives continue this unethical behaviour by attributing the tax evasion to their fiduciary duty to shareholders.

This article clearly illustrates how corporations will often break their social responsibility in order to maximize profits. Moreover, the fiduciary duty that directors face does not justify breaking the law. The failure to adhere to the conventional ethical business conduct can cause substantial damage to the corporation’s reputation, making it difficult to regain such prominence in the business world again. Furthermore, large companies that undergo tax avoidance often have stakeholders that are unaware of such actions, and once they find out, will be extremely disappointed and drop their affiliation with such organizations. This could have a significant impact on the stock price and future funding. Unethical behaviour by corporate executives may seem like a simple solution to attaining higher profits, but it actually creates long-term consequences for all parties involved. Hopefully, the statement provided by Farrer and Co. will slowly prevent unethical business behaviour from continuing.

The following is the link to the article discussed:
http://www.theguardian.com/business/2013/sep/08/tax-avoidance