Tax strategies and organisational communication in MNC supply chains: case studies

Communication is a key component of operational efficiency which in turn contributes to a firm’s profitability by reducing costs. In addition taxes are a significant expense for profitable firms. Multiple methods for tax avoidance have been developed by firms and their advisors but the effects on operations are rarely considered. Evidence was found that tax avoidance decisions are made in isolation at the head office and operational monetary and cultural costs are not fully accounted for. Better communication can mitigate these disruptions but it is not a primary concern of central management. Depending on its operational intrusiveness, there is variation in levels of organisational disruption caused by the tax avoidance method implemented. These effects can be far reaching. Careful consideration of organisational costs for each tax avoidance method should be made prior to any being adopted. A framework to help practitioners focus on total costs versus tax savings, is proposed.