US tech giants known as the “Silicon Six” have come under siege after a new report accused them of inflating their tax payments, claiming in their annual reports to pay more in taxes than they actually do, by almost $100bn over the past ten years.
The report compiled by the group Fair Tax Foundation said that the tech firms Facebook, Apple, Amazon, Google, and Netflix (FAANG), along with Microsoft, paid $96 billion less in taxes than the figures cited in their annual financial reports.
Generally, the companies paid income taxes totaling $219bn, which makes up only 3.6% of their $6 trillion total revenue. Income tax is calculated based on generated profits but the research found out the “Silicon Six” paid less tax by shifting income to low-tax jurisdictions.
The report found out that the alleged monopolistic tech giant, Amazon, run by Jeff Bezos, the world’s richest man, generated about $1.6 trillion in revenue, documented $60.5 bn in profit, and only paid $5.9 billion in taxes out of the expected $10bn.
Replying to the accusations, Amazon’s spokesman dismissed the tax calculations by saying they 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% are not rational,” the tech giant said.
According to the Guardian, the company went on to claim that it is doing what the government expects of them while investing a lot of resources in creating infrastructure and job opportunities, all of which results in lower tax rates.
Fair Tax Foundation’s Chief Executive Paul Monoghan, prefaced these claims by stating that the report 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”.
The other tech giant, Facebook, paid $16.8 billion in income taxes (12.7%) despite generating $328 billion in revenue and making a profit of $133bn in the past decade.
Netflix paid £0.8bn instead of £1bn, Microsoft £38.8bn, not £55.7bn, and Google £27.3bn not £35bn. (Business Mail UK)
Facebook responded to the accusations by stating that taxes are paid based on profits and not revenues. Facebooks spokesperson also pointed out that their average tax rate for the past decade was 10% which was roughly in line with the OECD average.
No public feedback has been provided on the allegations against Apple, Microsoft, Netflix, and Google.
The intel comes as Councilor Rishi Sunak calls upon world leaders to support a new ‘tech tax’ that will be presented in the G7 Summit to be held in the UK, next week. Rishi Sunak said that President Biden’s administration will spark a taxing revolution by backing up the tech tax deal.
“The right companies aren’t paying the right tax in the right places,” said Sunak to the Daily Mail on Sunday. “That’s not fair and that’s something that I want to fix.”