The “Silicon Six,” a group of massive US tech companies, have been accused of inflating their reported tax payments by about $100 billion (£70 billion) over the last decade.
A report by the campaign group Fair Tax Foundation singled out Amazon, Facebook, Google’s owner, Alphabet, Netflix, Apple, and Microsoft, as Chancellor Rishi Sunak called on world leaders to support a new digital tax ahead of next week’s G7 conference in the UK.
It stated that between 2011 and 2020, they paid $96 billion less in taxes than the hypothetical taxation estimates they mention in their yearly financial reports.
According to the Fair Tax Foundation, the six companies mentioned paid $149 billion less to worldwide tax authorities than would be expected if they had paid headline rates where they operated.
Over the last decade, they paid $219 billion in income taxes, accounting for 3.6 percent of their total revenue of more than $6 trillion. Profits are subject to income tax, but the researchers claim that the Silicon Six companies deliberately shift income to low-tax jurisdictions in order to pay less tax.
The report found that Amazon, the internet retailing and cloud services provider run by the world’s richest man, Jeff Bezos, collected $1.6 trillion in revenue, reported $60.5 billion in profit, and paid $5.9 billion in income taxes this decade, based on regulatory filings.
Based on international tax rates, Amazon should have paid $10.7 billion in taxes on those profits. Over the period 2011-20, the tax paid as a percentage of profit was 9.8 percent, the lowest among the so-called “Silicon Six.”
An Amazon spokesperson called the computations “extremely misleading.” “Amazon is primarily a retailer where profit margins are low, so comparisons to technology companies with operating profit margins of closer to 50% is not rational,” the company stated. “Governments write the tax laws and Amazon is doing the very thing they encourage companies to do – paying all taxes due while also investing many billions in creating jobs and infrastructure. Coupled with low margins, this investment will naturally result in a lower cash tax rate.”
The Fair Tax Foundation’s chief executive, Paul Monaghan, stated that the organization’s analysis provided “solid evidence that substantive tax avoidance is still embedded within many large multinationals, and nothing less than a root-and-branch reform of international tax rules will remedy the situation.”
Monaghan said US government proposals to reform the global tax system by implementing a minimum 15% corporation tax rate could assist large corporations stop “profit-shifting to tax havens.”
According to Treasury sources, the plan could be approved ahead of the G7 summit in Cornwall next month.
Chancellor Rishi Sunak has stated that he wants President Joe Biden’s administration to sign on to a technology tax agreement at the same time. “The right companies aren’t paying the right tax in the right places,” he explained to the Mail on Sunday. “That’s not fair and that’s something that I want to fix
Monaghan claimed that Biden’s tax proposals had “lit a fire” underneath the the international tax debate.
“The Biden-Harris proposals would see many of the incentives underpinning profit-shifting to tax havens removed, and would see the very largest multinationals taxed not just on where subsidiary profits are booked, but where real economic value is derived.”
Monaghan predicted that global tax accords would have a “seismic effect” on companies like Amazon, Apple, Facebook, Google, and Microsoft, resulting in billions of dollars in more taxes paid around the world.
Despite making $133 billion in earnings and $328 billion in revenue this decade, Facebook, which is headed by Mark Zuckerberg, who has a personal fortune of $123 billion, has paid only $16.8 billion in income taxes. After Amazon, the tax paid as a percentage of profit was only 12.7 percent, making it the second-lowest of the so-called “Silicon Six.”
“All companies pay tax on their profits, not their revenues,” a Facebook spokesman said. “Last year we paid $4.23 billion in corporate income taxes globally, and our average effective tax rate over the last 10 years was 20.71%, which is roughly in line with the OECD average.”