Business Ethics
In Business, ethics is known as decisions that follow the moral principles accepted within the society. These are known as ethical codes, a document consisting of guidelines/rules of a company.
Many businesses today, also have ethical objectives, which act as pre-defined goals they would like to achieve to do the ‘right thing’. I Businesses use this solely as a marketing tool to differentiate themselves from competitors to increase sales.
Today majority of the companies operate unethically in one way or another to reduce costs which allows to maximize profit margin to stay ‘competitive and successful’ in the market. Apple did something similar to maximize its profits overseas: (https://www.ft.com/content/3e0172a0-6e1b-11e6-9ac1-1055824ca907)
Ireland, a country part of the European Union is known to be a ‘tax haven’ for many corporations as it has a low corporate tax (12%), allowing multinational businesses to maximize profits to satisfy shareholders and/or increase the growth of the company.
Figure 1: Corporate tax across Europe (https://www.theguardian.com/business/2016/aug/30/apple-pay-back-taxes-eu-ruling-ireland-state-aid)
Apple Inc., a company which many of us know about, was under investigation for 3 years until August 2016 when a European commission found Apple guilty for paying 1% tax which was illegal under the EU law and ordered Apple to pay €13 billion+interest to the Irish government. Apple had set up two subsidiaries in Ireland, Apple Sales and Apple Operation Europe which had no employees and accounted for 90% of Apple’s foreign profit. The investigation also discovered that Apple and Ireland had struck a ‘special’ deal in 1991 which had allowed them to pay lower taxes ever since compared to other corporations.
Figure 2: Apple and Ireland are in times of crisis (http://money.cnn.com/2016/09/02/technology/ireland-apple-eu-tax-appeal/index.html)
I believe the Irish government and Apple reputation in the market will be tinted globally after the immoral tax scandal. Every corporation/individual earning an income has the obligation to pay tax and it was just morally incorrect for Ireland to give special attention only to Apple and provide them with tax benefits. Breaking the EU law can cause relation between EU and Ireland to decelerate in the long term as they broke the taxation law; moreover, many multinational companies may question their presence in Ireland and move out causing a negative impact on the Irish economy.
Although €13 billion is not a lot of money for Apple to lose, the scandal may adversely affect Apple’s future business growth if they are to invest further into the EU, as their reputation in the EU block has already been hit due to their unethical operation in Ireland. I mean why would EU allow Apple to invest into the EU after the immorality a multi billion dollar company has shown by creating companies that has no employees. This may cause the company competitive disadvantages, which position Apple to be at risk of losing ground to its competitive rivals i.e Samsung.
