So even big companies refuse to pay their taxes. No wonder the economy is taking a hit. Recently, six giant US tech firms have been accused of inflating their stated tax payments by almost $100bn over the past decade. Now that’s a lot of money. The companies are known as the “Silicon Six”.
The report came from the campaign group Fair Tax Foundation which singled out Amazon, Facebook, Google, Alphabet, Netflix, Apple, and Microsoft. This report might help support the new tech tax that was being discussed by Chancellor Rishi Sunak who called on the world leaders ahead of next week’s G7 summit in the UK.
According to the report, the firms paid $96bn less in tax between 2011 and 2020. Contradicting the national taxation figures they cited in their annual financial reports. They handed over $149bn less to global tax authorities according to the headline rates where they operated.
They manipulated the numbers by shifting income to low-tax jurisdictions to pay less tax. For a clearer view into the issue, the report talked about Amazon, saying that the company collected $1.6tn of revenue, reported $60.5bn of profit, and paid $5.9bn in income tax just this decade. However, if they had followed the international tax rates then Amazon was expected to pay $10.7bn in taxes.
The tax paid as a percentage of profit was just 9.8% over the period 2011-20, the lowest of the so-called “Silicon Six”. Amazon spoke out due to the accusation saying that they were “extremely misleading”. A spokesperson said that “Amazon is primarily a retailer where profit margins are low, so comparisons to technology companies with operating profit margins of closer to 50% are not rational. 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 Chief executive of the Fair Tax Foundation, Paul Monaghan, assured that their group’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”.
This report came as many world leaders were called to discuss a new tech tax. Chancellor Rishi Sunak has said that he wants the Biden Administration to sign up on the tech tax deal. He said that “The right companies aren’t paying the right tax in the right places. That’s not fair and that’s something that I want to fix”.
Facebook has also spoken regarding the accusation while the other companies namely Alphabet, Microsoft, Apple, and Netflix haven’t said anything.