Can loyalty and profit oriented decisions be combined? (Case of Ineos)

Where should important businesses (e.g. Multinationals) pay their taxes? How loyal has a company to be? Companies’ profit always depends on environemental circumstances. Subsidies, infrastructure, laws and regulations and other basic conditions are provided by a nations governmet. Should not be there loyalty if it comes to tax payments?

Ineos wants to “outsource” it´s headquarters from the UK to the “tax heaven” Switzerland what brings up general questions about loyalty and the moral of decisions that have to be taken in the business world to compete in the market.

"Moral" and "loyalty", big words that can mean anything but it starts with relyability to workers and to a whole country and its government. Businesses often have to take profit orientated decisions that help the firm to grow and to expand. On the one hand side a company can only be profitable and competitive when it is acting according to possible change (e.g. change in laws and tax regulations). As in many European countries the taxes are quiet high, a change of location of Headquarters (HQ) often rescues a company. The German Basler Zeitung describes the probable reallocation of Ineo´s HQ quiet objective but in my point of view it should get more pointed out that the change will help the UK based company growing and saving money. As stated in the Financial Times the saved money will be used for the UK Company and debts can be paid off easier. The Guardian uses a more confronting and provocating headline “Ineos tax deal sparks fury as firm plans move to Switzerland” to stimulate the reader to think about advantages, disadvantages and further impact if one of the biggest UK companies changes HQ. I prefer the more radical style of The Guardian that really points out the two different poles and mentions important issues like the reliance to a nations support in sense of infrastructe etc.

Is it a “taboo” to change HQ into another country? How important is it to stay in the home country? Can the movement of HQ change a company´s reputation?

Many questions which can be asked but only solved by analyzing each situation by its own:

As the Financial Times published the Ineos story on the Thursday´s front-page, the planned action is of high interest for the nation and people. I like the mentioned points in the article and I think the Financial Times shows immense insight of the impact of moving HQ into a tax heaven. The Financial Times point out the missing €450m that have otherwise been paid in tax to the UK. What a disaster!? How much money is missing in the UK financial reserves? The Basler Zeitung takes in an even more objective point than the Financial Times what is unusual and looks a bit like copied from another source from one of the UK Newspapers.

“The change of tax residence would allow us to increase investment to the benefit of all stakeholders in our business” states Ineos Chief Executive. His point of view is also stretched in the Financial Times and in the Basler Zeitung what I also see as the main argument from the business perspective. The company needs to do everything to survive and to keep up with competition because a bankruptcy would not help the nation ether the workers either the company itself. The daily Telegraph also shows a very objective point of view and only mentions important facts. In my point of view the daily Telegraph and the Basler Zeitung are not too much connecting the topic with further issues like loyalty to the home country or actions that need to be done to keep the company competitive to guarantee jobs in any place where the company is located. Diageo and Unilever, two other big UK companies are thinking about doing the same as Ineos. The economic crisis has cost the company money and they are trying to save “money” wherever it is possible. Therefore companies are not unwilling to stay with their cultural background but at a certain point there is no way back and the company has to take further steps to solve company’s problems. Changing HQ location, outsourcing and off-shoring are often results that help the company´s performance. All newspapers are lacking of further information and possible influence to the society.

In my point of view people and businesses which have a high influence on others have always a kind of “model role”. Companies that use the nation’s facilities as infrastructures and advantages like excelent workers should also be paying tax for it and for the society. Tax regulations should be straightened and tightened to secure it but most important is that future leaders implement it as a matter of course. I think that a nation like the UK or Germany has also to provide good conditions for Multinationals and other businesses to flourish their work and not to block growth or expansion. Harmony is not only the "key" between man and woman!

All in all the two poles (moral behaviour and business aims) are important aspects that should be carefully considered before a decision is made. Good luck Ineos but be aware its always hard to go for a come back...

Sources used:

Ineos Homepage

Date viewed: 04.03.2020

Available URLhttp://www.ineos.com/abo_his.html

Die BaslerZeitung

Chemie Gigant will in die Schweitz ziehen

Date viewed: 04.03.2010

Available URL: http://bazonline.ch/wirtschaft/unternehmen-und-konjunktur/ChemieGigant-will-in-die-Schweiz-ziehen/story/13341449

The Guardian

Ineos tax deal sparks fury as firm plans move to Switzerland

Data viewed: 04.03.2010

Available URL: http://www.guardian.co.uk/business/2010/mar/04/ineos-tax-breaks-plans-move

Telegraph

Ineos could leave UK over tax

Date viewed: 04.03.2010

Available URL: http://www.telegraph.co.uk/finance/newsbysector/pharmaceuticalsandchemicals/7364505/Ineos-could-leave-UK-over-tax.html

Financial Times from Thursday March 04.03.2010

Date viewed: 04.03.2010

Ineos looks to cut tax bill with Swiss relocation

The Times

Die Welt

Süddeutsche Zeitung

Frankfurter Allgemeine Zeitung