Report Accuses Biggest Tech Companies Of Paying Almost $100 Billion Less In Taxes

The biggest tech companies in the United States, dubbed “Silicon Six” have been accused of inflating the tax payments reported on their financial reports by almost $100 billion over the past decade, according to a report by Fair Tax Foundation.

As Chancellor Rishi Sunak called on world leaders to back a new tech tax ahead of next week’s G7 summit in the UK, a report by the campaign group Fair Tax Foundation singled out major Silicon Valley companies like Amazon, Facebook, Netflix, Apple, Microsoft, and Google's parent company, Alphabet.

The report revealed that these companies paid a total of $96 billion less than the notional tax figures cited in their annual financial reports, between the years 2011 and 2020.

These six companies named handed over $149 billion less to global tax authorities than would be expected if they had the paid headline rates where they operated.

Overall, they paid $219 billion in income tax over the past ten years, which equals 3.6% of their total revenue of more than $6 trillion. While income tax is paid on profits, these major companies have intentionally shifted income to low-tax jurisdictions to pay less tax.

Based on companies’ regulatory filings, the report found that in this decade, internet retailing company, Amazon, which is owned by Jeff Bezos, the number one richest person on Earth, collected revenue worth $1.6 trillion, reported $60.5 billion of profit, and paid $5.9 billion in income taxes. Based on international tax rates, Amazon would have been expected to pay $10.7 billion in taxes on those profits. The tax paid as a percentage of profit was just 9.8% from 2011 through 2020, making it the lowest of the “Silicon Six” companies.

These calculations have been argued by an Amazon spokesperson, who has claimed that the information is misleading.

 “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,” the company said. “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."

However, Fair Tax has pushed back, stating that much of Amazon's revenue comes from it's cloud computing services.

According to Paul Monaghan, chief executive of the Fair Tax Foundation, (the organization carrying out the investigation), the group’s analysis provides “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."

Paul Monaghan said the United States' government proposals to reform the global tax system by imposing a minimum 15% corporation tax rate could help put an end to big companies “profit-shifting to tax havens."

Chancellor Rishi Sunak has made it clear that he wants President Biden’s administration to sign up for a tech tax deal at the same time. “The right companies aren’t paying the right tax in the right places,” he said to the Mail on Sunday. “That’s not fair and that’s something that I want to fix.”

Paul Monaghan also claims Biden’s tax plans had “lit a fire” beneath the international debate on tax.

“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 also said a global tax agreement would have a “seismic impact” on giant companies like Amazon, Apple, Facebook, Google, and Microsoft, with billions of additional taxes paid across the world.

Facebook, which is run by Mark Zuckerberg, a man who sits on a personal fortune of $123 billion, has paid just $16.8 billion in income taxes this decade, even though it has made profits of $133 billion and revenues of $328bn, according to the report by Fairfax. The tax paid as a percentage of profit was just 12.7%, making it the second-lowest of the so-called “Silicon Six” after Amazon that paid 9.8%.

Speaking in their defense, a Facebook spokesman wrote, “All companies pay tax on their profits, not revenues. Last year we paid $4.23bn 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.”

The other companies involved, Apple, Netflix, Microsoft, and Alphabet, either declined to comment or did not respond to feedback requests.