Pressure to end digital ‘tax bonanza’

[dutchman]

Seven US technology giants, including Apple and eBay, paid just £54m in UK corporate tax in 2012, the Financial Times has discovered, highlighting the challenge for governments seeking higher tax revenues from multinationals.



The amount, which is relatively modest given the scale of their combined sales at $15bn, will add urgency to a planned rethink of global tax rules. A review was launched by world leaders last summer amid mounting frustration over the difficulty of capturing revenue from the internet sector. This prompted both Italy and France to propose new digital taxes last week.

The UK tax paid on profits made by Microsoft, eBay, Yahoo, Facebook and Apple fell in 2012, the last year for which figures are available, while those of Amazon and Google rose. The net effect was that their combined tax bill on current-year profits fell from £45m to £37m.

However, after adjustments and provisions, including £24m set aside by Google, the total UK corporation tax charge rose to £54m.

The new figures will concern David Cameron, prime minister, who promised a year ago to make “damn sure” that foreign companies paid higher taxes in the UK. Margaret Hodge, chair of the parliamentary public accounts select committee, described the figures as depressing. She accused the government of presiding over a “tax bonanza” for global internet companies.

The companies did not comment on the FT’s findings but they have repeatedly said they comply with all tax laws.

The relatively low tax payments by the technology companies reflect their ability to concentrate overseas economic activity in low tax countries such as Ireland, Switzerland and Luxembourg, leaving a minor role for operations in countries such as the UK.