Because of political instability in North Africa, let’s not disclose specific countries. In addition, we restructured most of our French sales and some of our U.S. sales to occur through our offices in the Cayman Islands.This allows us to avoid paying higher taxes in those countries. The Cayman Islands has a 0% corporate incometax rate. We don’t want to highlight our ability to shift profits to avoid taxes.Required:Do you perceive an ethical dilemma? What would be the likely impact of following the controller’s suggestions?Who would benefit? Who would be injured?
Because of political instability in North Africa, let’s not disclose specific countries. In addition, we restructured most of our French sales and some of our U.S. sales to occur through our offices in the Cayman Islands.This allows us to avoid paying higher taxes in those countries. The Cayman Islands has a 0% corporate incometax rate. We don’t want to highlight our ability to shift profits to avoid taxes.Required:Do you perceive an ethical dilemma? What would be the likely impact of following the controller’s suggestions?Who would benefit? Who would be injured?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Because of political instability in North Africa, let’s not disclose specific countries. In addition, we restructured most of our French sales and some of our U.S. sales to occur through our offices in the Cayman Islands.
This allows us to avoid paying higher taxes in those countries. The Cayman Islands has a 0% corporate income
tax rate. We don’t want to highlight our ability to shift profits to avoid taxes.
Required:
Do you perceive an ethical dilemma? What would be the likely impact of following the controller’s suggestions?
Who would benefit? Who would be injured?
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