Silicon Valley is home to some of theworld’s largest and most successful tech companies. However, an alleged taxevasion issue is now threatening to ruin this prestigious reputation.
The latest analysis showed that halfa dozen of Silicon Valley’s biggest corporations had an accumulated taxgap amounting to $100 billion from 2010 to 2019.
Fair Tax Mark, is an England-based organization that certifies businesses for having a good tax conduct with no incidence of tax evasion. The said British organization assessed international tax payments made by Facebook, Apple, Amazon, Netflix, Google and Microsoft for the past decade. The companies, also popularly called as the “Silicon Six,” for being a prominent name not just in Silicon Valley, but also worldwide, are now proven to have conducted some questionable tax activities.
Fair Tax Mark analyzed their 10-K filings, a set offorms required by the U.S. Securities and Exchange Commission which supposedlycontain the summary of the companies’ financial performance.
The organization checked out the companies’ tax provisions which is the budget that they have allocated in their financial reports to pay taxes and compared those to the actual amounts that have given to the government, noted as taxes. The comparison showed that over the last decade, the gap between the provisions the said companies declared and the amount of taxes they actually paid reached $100.2 billion.
The report specified that scrutiny of hugecorporations’ tax payments is commonly targeted on tax provisions, since it isusually not the actual amount received by the government. Additionally, theorganization’s report also claimed that the Silicon Six’s profits are stillbeing shifted to tax havens, countries that offer low tax rates, specificallythe British Overseas Territory of Bermuda, Ireland, Luxembourg, and theNetherlands.
Researchers indicated the majority of the inadequacy “almost certainly arose outside the united states,” with foreign tax charges amounting to merely 8.4% of the profit the businesses gained overseas from the year of 2010 to 2019, strongly indicating tax evasion.
Paul Monaghan, chief executiveofficer of Fair Tax Mark, stated that there was a huge distinction between whatthe corporations accounted for and what they really turned over in taxes. Inthe same statement, he also affirmed that the tax paid by these businesses is$100 billion less than what is reported in their accounts.
Amazon has now been dubbed as thebiggest culprit among the Silicon Six, with the report claiming that thee-commerce legend had only paid $3.4 billion in financial gain taxes since2010. Fair Tax Mark noted that the tax paid for by the organization amounted to12.7% of its profit over the last decade, despite the fact that company taxwithin the U.S. is set at 35% for more than half of the years enclosed withinthe analysis period (2010-2019).
Current President Donald Trump cut corporation tax rates from 35% to 21% in 2017, still a far cry from the 12.7% paid by Amazon.
Amazon ended 2018 with a total of $232.9 billion inannual revenue—indicating that the company has a market capitalization ofaround $892 billion.
A representative from Amazon told a news outlet thatthe report in Fair Tax Mark’s report is wrong. Claiming that the company had a24% effective tax rate on profits from 2010-2018.
The representative also claimed that Amazon hadinvested £55 billion ($60 billion) all over Europe since 2010, £18 billionwithin the U.K., and had paid £793 million in taxes to the U.K. alone just lastyear.
According to the report, Facebook had the second biggest tax gap. The company paid a minute 10.2% of the profit it made over the last decade— an all-time low proportion paid by any of the Silicon Six. Its foreign tax charge was conjointly the lowest, at only 5% of foreign profits, yet again strongly indicating a concerted effort to engage in tax evasion.
A representative from Facebook also said in anemailed statement that the company takes its tax obligations seriously,diligently paying what it owes in each market it operates. The representativeasserted that Facebook paid $3.8 billion in corporation tax globally and thattheir effective tax rate is at least 20%.
The popular tech giant, Google, was at third, with its cash taxes amounting to only 15.8% of profits, and its foreign tax charge was at 7.1%
The popular streaming platform, Netflix, is at thefourth spot. The company gave out 15.8% of its profit over, whereas Apple, inthe fifth spot, handed 17.1% over the last 10 years.
Netflix declined to discuss the findings of thereport while Apple stated that they pay entirely what they owe in line with taxlaws and local customs where they operate.
As the report’s “best” taxpayer, Microsoft pridesitself to fully abide by all local laws and regulations in every country theyoperate in and that their tax structure reflects the said global operations.