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The directors of Fritton have just been told by their accountants of a loophole the accountants believe they can exploit through trading in a certain country abroad, the Southern Equatorial Republic. They can exploit this country's tax regime by electing that their worldwide profits are treated as taxable there and, because the tax rate there is very low, paying very little tax. This will mean that Fritton will have zero chargeable profits and will not be taxed in its home country. However there has been considerable adverse publicity in Fritton's home country about the use of this loophole. The local tax authorities are also investigating whether the loophole is valid. The tax situation was discussed at a recent board meeting. Which of the following views expressed at the meeting is an example of a pre-conventional method of reasoning using Kohlberg's framework? A. We shouldn't make the most of small print in the tax legislation to avoid our obligations to the society we operate in. B. If our government wants us to stop channeling our profits through the Southern Equatorial Republic, it should give us more tax concessions itself. C. We don't yet know whether the loophole is legal or not. D. Why shouldn't we do what other companies are doing and make the most of the loophole. |