Apple, Google, Facebook, Amazon, Starbucks owe £1bn tax, but pay only £33m

October 15th, 2012

The banks and big business are making monkeys out of the government.   Of the Big 4 technology giants, Apple (according to Sunday Times research) is estimated to have dodged £570m tax last year.   Analysis of data filed by the company in the US suggests that the UK would normally account for one-tenth of Apple’s global revenue.   On that basis the company’s UK turnover last year was about £6.7bn, implying an estimated profit of £2.2bn which should generate £570m in corporation tax at 26%.   However, Apple’s latest accounts show UK turnover at slightly over £1bn and a profit of just £81m, i.e. only £14.4m was paid in tax – a mere 2.5% of its true tax liabilities.

A similar pattern emerges for the other companies.   Google’s US accounts show that its UK turnover was £2.6bn, implying that it should have paid an estimated £224m in British tax.   In fact it paid precisely £6m, just 2.6% of its real tax liabilities.   Facebook, the largest social networking site in the world, has estimated UK revenues of £175m a year, indicating a tax liability of £21m, yet it pays precisely £0.2m in tax to the UK Treasury, just 1% of what it should have paid.   Amazon should have paid £11m in UK tax, but actually paid only £1.9m.   Starbucks (according to research by Reuters) has had a UK turnover since 1998 of £3bn, but has paid just £8m in tax.

How do they get away with such greed and evasion?   Apple shuttles its money through a related company in Ireland, where corporation tax is only 12.5%, and then onward to the British Virgin Islands tax haven.   Google has a similar offshore strategy, with the money ultimately ending up in Bermuda.   That could be blocked by requiring that tax is paid where the company really earns its profits, and that could be achieved by requiring all multi-national companies to make country-by-country reporting for all their profits worldwide.   They would then have to publish in their annual audited financial statements a country consolidated profit and loss account, a limited balance sheet, and the cash flow data on the tax paid for every jurisdiction where they have a permanent establishment for tax.

But there are other devices used by these tax avoiders which can and should be stopped.   Googla and Facebook, for example, have built up losses on their UK balance sheet by handing shares worth millions of pounds to employees, which are then classed as a taxable expense to be set against liability for corporation tax.

It is a scandal that Osborne is taking another £10bn from some of the very poorest people in Britain when these multi-billion corporates in the FTSE-100 are avoiding tax worth that total and much, much more.

4 Responses to “Apple, Google, Facebook, Amazon, Starbucks owe £1bn tax, but pay only £33m”

  1. Andy Hall Says:

    ‘That could be blocked by requiring that tax is paid where the company really earns its profits, and that could be achieved by requiring all multi-national companies to make country-by-country reporting for all their profits worldwide.’

    Hello. You were a senior politician in Government. These are not recent rules introduced by Osborne. They are an unfortunate consequence of the way international tax is structured and used by big business at large. Almost ALL large MNC use perfectly legal structures such as Swiss principals, or Luxembourg sellers. If we want it to change, it’s down to politicians and international political co-operation.

    YOU should/should have been trying to change it when YOU were in Government. Whinging at the big companies is easy [and the public will support you because a) we generally don't know much about international tax and b) it does seem unfair].

    YOU should have done something about it, if you care so much. To heap to blame on Osborne now (i’m no tory) is disingenuous and puts you in the role of an out-and-out demagogue.

  2. Steve Evans Says:

    Sir,
    I read with horror at yesterday’s story, broken by Reuters,about Starbuck’s UK tax liabilities.
    Someone is lying somewhere. Negative profits on a turn-over of more than a billion pounds? For year after year?
    And what exactly happened here” Starbucks was the subject of a UK customs inquiry in 2009 and 2010 into the company’s transfer pricing practices. This was “resolved without recourse to any further action or penalty”, a Starbucks spokesman said. HMRC declined to comment on the probe.”
    I think some sort of inquiry is required and will be in contact with my MP Neil Carmichael and hope he will offer his support to your campaign.
    I was also quite surprised that there have been no reports on the radio nor television since the story broke. Are questions going to be asked in the House or is this just more smoke and mirrors?
    And what are the HMRC doing? 14 years of trading!!!
    Regards
    Steve

  3. shaelherman Says:

    Sirs, When you discover what trickery these great companies have engaged in, please tell the U S IRS, which appears entirely asleep and doing next to nothing to have taxes on the foreign profits brought to the US. U S taxation applies to worldwide net revenues, so Starbucks must be fiddling its books to the tax collector here.

  4. Jason Kilburn Evans Says:

    Shouldn’t these companies be required to pay their tax before sick and disabled people are kicked off the benefits that provide their only safety net?

Leave a Reply