Fair Tax Foundation: US tech giants paid $100 billion less in taxes than claimed

Amazon and Facebook are the worst tax offenders, according to new analysis

The biggest tech firms in the US paid almost $100 billion less in taxes over the past decade than stated in their annual reports, a new analysis by the Fair Tax Foundation claims.

The 'Silicon Six' (Amazon, Apple, Facebook, Microsoft, Netflix and Google's owner Alphabet) paid nearly $219 billion in income taxes from 2011 to 2020: about 3.6 per cent of their more than $6 trillion in combined revenue, according to the campaign group.

The Foundation claims that this figure is about $96 billion less than the companies had claimed in their annual reports; and they paid more than $149 billion less to global tax authorities than would be expected, had they paid headline rates where they operated.

Big tech firms are well versed in reducing tax liabilities by deliberately shifting their income to offshore tax havens, says the Fair Tax Foundation.

The report named Amazon and Facebook as the worst offenders in tax avoidance. The researchers claim that Amazon paid $5.9 billion in taxes between 2011 and 2020, on reported profit of $60.5 billion and revenues of $1.6 trillion.

Based on international tax rates, the company should have paid $10.7 billion in taxes over that period.

Similarly, social networking giant Facebook paid $16.8 billion in income taxes from 2011-20, on reported profits of $133 billion and net revenues of $328bn.

Facebook's tax paid as a percentage of profit was just 12.7 per cent, the second-lowest after Amazon's 9.8 per cent.

An Amazon spokesperson told The Guardian that the Foundation's calculations were "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 per cent is not rational," the spokesperson said. Amazon's retail net sales in 2020 were $340.7 billion, with operating incoming of $9.4 billion. By contrast, AWS had net sales of $45.4 billion and operating income of $13.5 billion.

The spokesperson added that Amazon "pays all taxes due while also investing many billions in creating jobs and infrastructure."

A Facebook spokesperson said the firm paid $4.2 billion in corporate income taxes globally in 2020, and that its "average effective tax rate over the last 10 years was 20.71 per cent."

The Fair Tax Foundation's report comes as discussions are ongoing among G7 countries on the issue of minimum corporate tax rate.

Last week, the UK said that any global agreement on minimum corporate tax rate must ensure that digital businesses pay their fair share, reflecting their economic activities.

"Our consistent position has been that it matters where tax is paid and any agreement must ensure digital businesses pay tax in the UK that reflects their economic activities," a British finance ministry official told Reuters.

The statement came following a US proposal that multinational firms' profits should be taxed at an effective rate of 15 per cent in OECD countries, down from an initial proposal of 21 per cent.

Although the proposal has attracted widespread support Britain has been cautious, putting more weight on the location of the tax payments.

According to Reuters, finance minister Rishi Sunak wants large tech firms with overseas headquarters to pay more tax in the UK.

"I want to make sure we get the right deal for British taxpayers, that we level the playing field for British high streets and that's what I'm doing," Sunak told the Mail on Sunday.

"Large multinational companies, particularly digital companies, are able by the nature of their businesses not to pay the right tax in the right places. And that's not fair and means there isn't a level playing field with high street businesses. And that's what I want to fix," he added.