Legal factors connected to tax and customs regulations
Clarke Ricks School of Business,
Liberty University
BUSI 690: Policy and Strategy in Global Competition
Dr. Hicks
April 9, 2022
Legal factors affecting business
Legal factors affecting business include all regulatory and law determinants that can
negatively or positively affect results of market actions and decisions
of management of company functioning in particular country. International companies must
analyze and identify those factors (legal environment) independently for every state they
function. Legal factors analysis is integral part of every strategic analysis method including PEST
analysis, STEEP analysis, PESTEL, PESTLE and other derivatives of strategic business
environment analysis. It should be noted, that legal environment is constantly changing, laws
are not set in stone and may change according to political and international climate. Legal
factors are closely associated with ethical factors affecting business.
Legal factors connected to tax and customs regulations
Tax and customs regulations are important legal factors that can affect businesses. These
regulations can vary depending on the country or region in which a business operates, and can
have a significant impact on the financial aspects of a business. Tax regulations can include laws
related to income tax, sales tax, and property tax. Businesses must comply with these laws and
file accurate and timely tax returns. Failure to do so can result in fines and penalties.
The factors in this category include:
country tax code (may be different in every country served by business),
tax restrictions for particular types of business,
export and import restrictions,
tax relief for some types of products or businesses promoting development,
taxes and customs imposed on consumed goods may influence demand,
individual income tax, corporate income tax,
overall tax and fiscal policy (excise duties),
Customs regulations refer to laws related to the import and export of goods. These
regulations can include tariffs, quotas, and rules related to the classification of goods, as well as
compliance with international trade agreements. Businesses that engage in international trade
must comply with these regulations and may need to work with customs brokers
or freight forwarders to ensure compliance.
It is important for businesses to stay informed about relevant tax and customs regulations
and to consult with legal and financial experts to ensure compliance and minimize financial
risks.
General economic policy
General economic policy refers to the overall economic strategy of a government and can
include policies related to taxation, spending, monetary policy, and trade. These policies can
have a significant impact on businesses and can affect factors such as consumer spending,
interest rates, and inflation.
For example, a government's monetary policy, such as setting interest rates, can affect
the cost of borrowing for businesses and consumers, which in turn can impact investment and
spending decisions. Similarly, tax policies can affect a business's profitability and cash flow.
Trade policies, such as tariffs and trade agreements, can also affect businesses, particularly
those that engage in international trade. Changes in trade policies can affect the cost of goods
and services, as well as access to foreign markets.
The factors in this category include:
monetary policy,
trade policy regulating trade in particular region (trading quotas, restrictions),
individual and corporate property rights,
government control on business activity (approval, licenses, concessions),
Promoting specific businesses and products (environmentally friendly goods, healthy
products, housing, etc.)
Banning or limiting specific businesses and products (guns, explosives, drugs, products
harming for environment, etc.),
Laws involving environmental protection (emissions, waste disposal, recycling, etc.)
unfair competition laws, antitrust laws,
specific regulations of finance, banking and insurance companies,
reporting laws for companies operating in the stock market,
public accounting standards
Copyright and patent protection regulations (intellectual property laws, etc.)
Privacy and data security laws (cyber fraud protection, impersonation protection, etc.),
It is important for businesses to stay informed about relevant economic policies and to
consult with financial experts to anticipate and adapt to potential changes that may impact
their operations.
Laws and regulations related to employees protection
Employees protection refers to laws and regulations that protect the rights of employees
and provide for safe and fair working conditions. These legal factors can include:
anti discrimination laws (race, religion, sex, age, harassment, etc.),
health and safety as work (work breaks, work time and shifts, safety equipment,
clothing, etc.),
work environment regulations (temperature, hygiene, facilities)
protection against dismissal,
trade unions regulations,
fair and minimal wages regulations (welfare, etc.),
minimum contract requirements and mandatory contract elements,
mandatory health and social insurance requirements,
laws involving employment of foreign workers and managers,
anti immigration laws,
health care laws and mandatory health care insurance,
retirement laws, retirement plans and mandatory insurance,
It is important for businesses to stay informed about relevant employees protection laws
and regulations and to consult with legal experts to ensure compliance and minimize legal risks.
Legal factors involving consumer protection legislations
Consumer protection refers to laws and regulations that protect the rights of consumers,
and ensure that they have access to accurate and fair information when making purchasing
decisions. These legal factors can include:
Truth-in-advertising laws: Laws that prohibit false or misleading advertising and require
businesses to disclose any material information that may affect a consumer's decision to
purchase a product or service.
Product safety laws: Laws that require businesses to ensure that their products are safe
for consumers to use and that they meet certain safety standards.
Warranty and refund laws: Laws that govern the terms under which products can be
returned or refunded and how warranty claims are handled.
Data protection laws: Laws that govern how businesses collect, use, and protect
personal information of consumers.
Consumer complaint laws: Laws that establish procedures for consumers to file
complaints and seek redress for grievances against businesses.
Consumer credit laws: Laws that govern the terms and conditions of consumer credit,
including interest rates, fees, and credit reporting.
Age restrictions
It is important for businesses to stay informed about relevant consumer protection laws and
regulations and to consult with legal experts to ensure compliance and minimize legal risks.
References
Durnev, A., & Kim, E. (2005). To steal or not to steal: Firm attributes, legal environment,
and valuation. The Journal of Finance, 60(3), 1461-1493.
Edelman, L. B., & Suchman, M. C. (1997). The legal environments of organizations.
Annual review of sociology, 479-515.
Pearce, J. A., Robinson, R. B., & Subramanian, R. (2000). Strategic management:
Formulation, implementation, and control. Columbus, OH: Irwin/McGraw-Hill.
