Amazon, Apple, Facebook Should Hang Their Heads In Tax Shame

It is a bumper day for anyone who wants to point out what Brits, and EU citizens in general, find so annoying about the American tech giants. First we have news that the EU is going to the extraordinary length of taking the government of Ireland to court over Apple and €13bn of unpaid back tax. Then we have Facebook quadrupling revenue in the UK, yet paying only a million pounds extra in tax.

Oh, and Amazon has not been paying its fair share of tax, although it has gone to the length of pretending to be based in Luxembourg. For those who may not realise, Luxembourg is a tiny strip of land in Europe famed for bankers holing up there to pay as little tax as possible. No wonder, then, that Amazon pretends to be headquartered there despite the majority of its business taking place in the UK and most of its goods being dispatched from its UK base. Considering its reputation of a bolt hole for the rich, it will come as little surprise to hear that the EU believes three-quarters of Amazon's profits were not taxed properly.

It may come as a surprise, however, that this only means Amazon owes the EU €250m or $290m. Reuters goes as far as to point out that most onlookers are left baffled how Amazon owes such a low amount in back tax when Apple is being chased for €13bn. 

Which brings us neatly back to how, despite what Dublin says when it denies a "sweetheart" tax deal for Apple, even the EU no longer believes it. Brussels is now fed up with talk, or "blarney" as it might be referred to in the UK and Ireland, and it wants to see action. Sky News points out that Apple has been paying just GBP50 of tax on GBP1m of profit. As tax rates go, that doesn't even come near to registering a small fraction of a single percentage point. That's how ridiculous Ireland's position is when it claims to be taxing Apple properly and so doesn't need to charge billions in unpaid tax, as the EU insists it must. 

That whole deal stinks. Speaking of which, Facebook has quadrupled revenue to GBP842m and yet only makes a profit of GBP58m, meaning that it has costs of just under GBP800m. On that profit it should have paid GBP11m in tax but a perfectly legal share arrangement with staff meant that it paid just GBP5m. That works out at less than 10% of profits and well under 1% of revenue.

The Telegraph doesn't quite elaborate on what lies behind it pointing out the low percentage of tax, despite revenue quadrupling, but the insinuation is pretty clear. I have no idea of the inside track on those costs of nearly GBP800m that Facebook must have racked up to get profits so low. However, it is a common tactic for huge companies to "do a Starbucks" and divert revenue to a low tax haven to pay for the right to use the company's own name.

Regular readers will know that I am proud to count myself among the growing number of Brits who find the American tech giants setting up in London and then pretending to be in some tax haven very disturbing. Remember that Facebook and Google take more than half of the internet advertising produced in the UK, and that will soon be around 70%. To hoover up UK ad spend and then use some very smart -- and morally bankrupt -- tax avoidance tactics just sticks in my craw. I am certainly not alone on this. 

Even the EU is now forcing its own member governments in Ireland and Luxembourg to cease and desist in allowing such widespread avoidance to carry on -- and this says everything you need to know.

It's not just us citizens questioning this -- it's our governments too. The American tech giants are sucking the blood out of the digital ad market and ecommerce industry in the UK without paying their way. It's a shameful state of affairs. 

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