Explain How To Determine The Appropriate Tax Strategy For Sabmiller

1. To determine the appropriate tax strategy for SABMiller going forward, one must identify the ethics of each of the four areas that they were accused of for unfair treatment by the ActionAid report. One of the key issues in which the report outlines was the use of tax havens and transfer pricing. This strategy allows a company to shift expenses associated with materials to high-tax countries such as Ghana and the revenue associated with the material to low-tax countries or tax havens. The key is that the transfer price must be set to either what the seller would charge a third-party or what the buyer would pay an arms-length supplier . Going forward, SABMiller needs to ensure that their prices met this criteria. With this, they must ensure
Otherwise, they should clearly stop the practice as it not only affects the tax treatment but takes the ownership away from local management. This would be a clear ethical lapse. However, this is most likely not the case. By holding trademarks in the Netherlands, SABMiller is able to centralize the ownership of the trademarks to avoid having a web of cross licensing between entities in different countries that SABMiller controls . Further, this is not an uncommon practice for multinational companies. This is not the only reason why SABMiller may be holding trademarks in the Netherlands. There are particular laws which discourage companies from filing trademarks in particular countries due to a lack of protection for the intellectual property rights. Ghana is one such country as they are not part of a key piece of the 1989 Madrid Protocol which helps protect trademarks and other intellectual property. This protocol allows protection of a trademark in several countries by filing it with a national trademark office2. This is the most likely case why SABMiller selected Netherlands as they offer this valuable protection. As a result of these reasons outlined, despite the criticism, SABMiller has good reason to file their trademarks in the Netherlands and thus does not have an ethical
It is not uncommon to centralize service charges into one country by multinational companies2. Similar to trademarks held in the Netherlands, it’s important to consider nontax benefits to this business decision. For one, this can help lower costs as firms can standardize processes and procedures . Further, companies such as SABMiller understand the exact services which are provided. With this, there are important considerations SABMiller must address. They must ensure that Ghana was benefited from the services, the charge was reasonable, and the services were not duplicated to increase the expenses. If these are not met, SABMiller must either make certain the services do met the criteria in the future or they should stop the practice. If they are met, then SABMiller is doing good business practice and the tax benefits comes along with