Arguably, the most basic principles in business are minimising cost and maximising profit. Thus, it is not unnatural that businesses would seek to reduce their expenses to the barest minimum. It is likely that a business which has incurred substantial punitive payments would expect to treat such payments as deductible expenses in ascertaining its taxable profit. Conversely, the tax authorities have the responsibility of ensuring that businesses pay their taxes in accordance with the tax laws. A pertinent issue which our article in the link below examines is whether such punitive payments are tax-deductible.
