Biggest Business Tax Scandals

by Lilly on September 3, 2013


Everyone loves a good tax scandal. Tax scandals are present all around the world. Most businesses try to avoid as many taxes as they possibly can (because all businesses in the United States are taxed at 40 percent, as of 2012), because they want to increase profits. However, when large companies get caught engaging in tax evasion that is when trouble starts and people take notice.

Many companies try to incorporate or have their offices registered in low-tax countries, such as Ireland or Switzerland. Companies also try to create subsidiary companies in other low-tax countries around the world. The subsidiary companies loan money to the main company, which can then avoid paying taxes on the money by levying the loan payments to pay reduced taxes, according to online news publication Mail Online.

Take a look at the following three large companies and their recent tax scandals:


Although Apple is the poster child for innovation in the United States, they are also one of the biggest tax evaders in the world today. The company was recently called in front of the U.S. Senators to explain their shaky tax practices. Basically, Apple combines strategies to conduct as much business as possible in low-tax countries while trying to spend as much money as possible in high-deduction countries. Surprisingly enough, the public was mostly unaffected by their actions. Apple’s reputation has remained steady.


Starbucks is an American company that has coffee shops around the world. Since 1998, Starbucks has had a presence in Great Britain. Recently, it has come to light that Starbucks has paid very little tax to GB since opening its doors. In fact, over the past 15 years, Starbucks has only paid about £8.6m in income tax. Starbucks did this by paying money to a Starbucks subsidiary, royalty payments to other subsidiaries, and avoided taxes by creating a subsidiary in Amsterdam.

Since the hearing, Starbucks has made a statement declaring that in the 2013-2014 tax year, they will pay £10m over the specified tax amount in the UK, The Economist reports. In the UK, Starbucks’ reputation did fall in the public eye, but the pledge to pay more in taxes next year has somewhat improved their standing.


Amazon is another retailer accused of tax evasion. In fact, because Amazon is an online business, the company was able to avoid paying sales taxes at all. This is a corporate loophole that will likely be eliminated soon. The United States is currently trying to pass a law that would charge sales tax on all online transactions.

In Europe, Amazon is engaging in other tax evasion techniques. Amazon has used the Double Irish and Dutch Sandwich techniques to avoid taxes. This is where revenues are booked in Dublin and then converted to royalty payments to a Dutch-owned subsidiary. Amazon claims its low tax rates in England were due to the fact that British operations were back-office services to the real profitable activity based on Luxembourg.

Most of the public reacted to Amazon with disappointment- but not for the reason you think. Most shoppers do not want to have to pay additional sales tax on online purchases.


But for these three companies and other large companies (and even some individuals) around the world, tax evasion is simply business as usual. Nobody likes paying taxes, however, you can take different kinds of tax deductions, ones you might not even be aware of, but in order to do that you need to sit down with your local tax accountant and discuss the exact details in your case. (You can contact professional tax accountants at




I'm Lilly Sheperd, an occasional guest-blogger and a full time freelance communication consultant. When not blogging, I like to travel and read a lot, especially about education and law.

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