This report was commissioned to examine the case of tax avoidance by multinational companies, like Google. The research draws attention to the background and raises the question to consider if the tax strategies used by Google in Australia are ethical.
Subsequently, a stakeholder analysis of the company and a Corporate Governance Discussion is performed. Afterwards, the implementation of Corporate Social Responsibility and the Corporate Social Performance of Google are scrutinized. Finally, an ethical analysis and recommendations will be provided.
In conducting this report, only secondary research methodologies were used, implementing resources such as books and websites.
The stakeholder analysis showed that society also present an important group of stakeholders. In view of the tax avoidance it becomes clear through the corporate governance principles and compliance with corporate social responsibility and performance that Google acts in a legal framework. Thus Google would like to expand their competitiveness and increase profits by utilising tax avoidance. However, Google does not consider societies unethical perception of their actions. The resulting consequences of these actions are also disregarded. Therefore society is expected to compensate with higher tax payments and national budgetary shortfalls are acceptable.
Evaluation of the case study leads to the following recommendations: A weakness was identified in the transparency and ethical responsibility of the company towards their stakeholders. It is recommended that Google should show more transparency and improve social responsibility in order to satisfy stakeholders’ needs and wants. Special attention should be paid to ethical decision-making. Recommendations have been made to suggest that a more ethical view by Google could potentially improve the company’s perception in future.
Table of Contents
1 Case Background
2 Body of the Analysis
2.1 Stakeholder Analysis
2.1.1 Who are Google’s Stakeholders?
2.1.2 What are the Stakeholders’ Stakes?
2.1.3 What Opportunities and Challenges do the Stakeholders present?
2.1.4 What Responsibilities do Google has towards their Stakeholders?
2.1.5 What Strategies should Google take to best address their Stakeholders?
2.2 Cooperate Governance based on OECD Principles
2.2.1 The Independence of the Board
2.2.2 Ethical and Responsible Decision-Making
2.2.3 Disclosure and Transparency
2.3 Corporate Social Responsibility
2.3.1 Economic Responsibilities
2.3.2 Legal Responsibilities
2.3.3 Ethical Responsibilities
2.3.4 Philanthropic Responsibilities
2.4 Corporate Social Performance
2.5 Ethical analysis
3 Conclusion
4 Recommendations
4.1 Demonstration of more Transparency
4.2 Improvement of Googles’ Ethical Responsibility
Objectives and Topics
This report examines the ethical implications of the tax avoidance strategies employed by Google in Australia. By applying a stakeholder analysis, evaluating corporate governance structures, and reviewing corporate social responsibility practices, the study explores whether the company's fiscal conduct aligns with ethical standards and broader societal obligations.
- Analysis of Google's key stakeholder groups and their respective interests.
- Evaluation of Google's corporate governance in relation to OECD principles.
- Assessment of Google's corporate social responsibility (CSR) and performance (CSP).
- Investigation into the ethical legitimacy of aggressive tax avoidance structures like the "Double Irish with a Dutch sandwich".
- Provision of recommendations to improve transparency and ethical responsibility.
Excerpt from the Book
1 Case Background
The American subsidiaries of Alphabet Inc., Google Inc., became known by offering internet services, as for example through the search engine of the same name; Google. The company was founded in 1998 by Larry Page and Sergey Brin. Google currently has 40,000 employees in 70 establishments in more than 40 countries. With the headquarters in Mountain View, California, Google is by far the most popular search engine today with a worldwide market share of 70 per cent (Google Inc. n.d.). The most important income source for Google is advertising. Customers can position themselves in the search engine according to the amount of their budget. For many years Google’s revenues and growth rates continuously increased and forecasts predict around 60 billion US dollars in turnover for 2016 (Statista 2014).
To legally avoid taxation Google organised a holding company in Ireland and redirect a large portion of their revenue there. Regardless of where advertising is initiated revenue often ends up at the Irish subsidiary. For example, whoever books online advertising with Google in Australia ultimately gets a contract with Google Ireland Ltd. The other establishments of Google merely act as service providers. Thereby Google pays significantly less tax because the corporate tax rate on the green island amounts to just 12.5 per cent. This company tax rate is the lowest among the 34 combined industrial countries in the Organisation for Economic Cooperation and Development (OECD). To avoid the tax payment completely, the holding is registered in Ireland but is located in tax havens like the Cayman Islands. After all, Google must generally make no tax payments there because the company is not taxable in Ireland according to Irish law. Google's putatively unprofitable Irish subsidiary is a classic example of how international large enterprises move their profits on the globe back and forth to pay as little as possible to the treasury (Theurer 2011; Voss 2012).
Summary of Chapters
1 Case Background: This chapter provides an overview of Google’s global operations, its dominant market position, and the mechanisms used to achieve tax efficiency through Irish subsidiaries.
2 Body of the Analysis: This section conducts a comprehensive stakeholder analysis, examines governance against OECD standards, evaluates CSR dimensions, and performs an ethical review of the company's tax strategies.
3 Conclusion: The conclusion summarizes that while Google’s tax practices are legal, they are ethically questionable and fail to consider the broader societal impact.
4 Recommendations: This chapter proposes concrete measures to improve transparency and ethical responsibility to align corporate actions with stakeholder expectations.
Keywords
Google, Tax Avoidance, Stakeholder Analysis, Corporate Governance, OECD Principles, Corporate Social Responsibility, CSR, Corporate Social Performance, Ethical Analysis, Utilitarianism, Transparency, Double Irish with a Dutch sandwich, Tax Justice, Multinational Enterprises, Business Ethics.
Frequently Asked Questions
What is the core focus of this report?
The report focuses on evaluating the ethicality of tax avoidance strategies implemented by multinational companies, using Google’s operations in Australia as a primary case study.
What are the central themes discussed in this document?
The central themes include stakeholder management, corporate governance frameworks, the role of corporate social responsibility (CSR), and the moral dilemmas surrounding tax optimization versus societal contribution.
What is the primary research goal?
The research aims to determine whether Google's tax strategies are ethical by analyzing the company's behavior against corporate governance principles and the needs of its various stakeholders.
Which scientific methodology is employed?
The study utilizes secondary research methodologies, analyzing and synthesizing data from existing books, academic sources, and credible online reports.
What is covered in the main body of the analysis?
The main body covers a stakeholder analysis, a discussion on OECD governance principles, an explanation of CSR and CSP, and an ethical analysis of the company's profit-maximization practices.
Which keywords best characterize this work?
Key terms include tax avoidance, stakeholder analysis, corporate governance, CSR, and business ethics.
How does Google justify its current tax structure?
Google maintains that it complies with all applicable tax laws in the countries where it operates and that its investments support national economies, thereby fulfilling its obligations to stockholders.
What specifically does the "Double Irish with a Dutch sandwich" structure entail?
It is a tax optimization strategy where revenue is redirected through Irish and Dutch subsidiaries to exploit low corporate tax rates and tax havens, effectively minimizing the total tax burden of the multinational enterprise.
- Quote paper
- Anonym (Author), 2015, A global giant slipping through the tax net. The case of Google in Australia, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/321423
