Ireland has in the works plans to change some of its tax laws. These changes could have radical effects on global companies, who as of right now, are taking advantage of Ireland's “Double Irish” tax loophole. Global companies have been looking for ways to decrease their tax liabilities and have done so by registering their companies in Ireland and moving profits to offshore tax havens like Bermuda and the Cayman Islands. The exact amount of money being sent through this process is not known but is estimated to be around tens of billions of dollars.
globalEDGE Blog - By Tag: accounting
Globalization has been the result of many different developments. From the increasing ability to ship goods across the world at low rates to moving manufacturing to achieve lower labor expenses, globalization is an entrenched part of the new economy. Another element factoring into globalization, that is not mentioned quite as much but has played an increasingly large role, is that of taxes.
Just about two weeks ago it was reported that Hewlett-Packard had to write down somewhere in the neighborhood of $8.8 billion, stemming from an acquisition of a United Kingdom based software company, Autonomy. Accounting improprieties within the acquired company seem to be at the heart of the issue and HP claims the fraudulent numbers account for over 5 billion of the write down. Two of the “Big Four” accounting firms were brought in to perform due diligence for the deal but the inconsistencies still managed to slip through. This is an extremely public example that calls into question the different accounting standards practiced in different countries and how those should be reconciled.
In part one we talked about the huge environmental costs for companies and the economic impacts these may have. Now we want to see what can be done, if reporting these costs should become standard, and the benefits this may have. Already many companies have made huge investments in reforestation, reducing water consumption, and an overall protection of natural resources. With the rising costs of valuable resources which are in danger, it only makes sense that these become a regular part of a company’s investment. With a strong sustainability agenda, corporations can help business be perceived as the place to best change what is going on in the world. As more companies realize how much sustainability helps their financial accounts, they’ll want to know how best to report these costs, and what can be done about them. The best step is to no longer ignore what’s going on, no matter what way you look at it.