Question

What is meant by the term “tax morality”? If for example, your company has a subsidiary in Russia where some believe tax evasion is a fine art, should you comply with Russian tax laws or violate the laws as do your local competitors? Why or why not? Please try to meet 450 words if possible, thank you so much.

Answer 1

Answer:.

The MNE faces not only a morass of foreign taxes but also an ethical question. In many countries taxpayers, corporate or individual, do not voluntarily comply with the tax laws. Smaller domestic firms and individuals are the chief violators. The MNE must decide whether to follow a practice of full disclosure to tax authorities or adopt the philosophy, “When in Rome, do as the Romans do.” Given the local prominence of most foreign subsidiaries and the political sensitivity of their position, most MNEs follow the full disclosure practice. Some firms, however, believe that their competitive position would be eroded if they did not avoid taxes to the same extent as their domestic competitors. There is obviously no prescriptive answer to the problem, since business ethics are partly a function of cultural heritage and historical development.