Seven large tech groups estimated to have dodged £2bn in UK tax in 2021, new TaxWatch analysis shows.
The report out today says that seven large US-based technology groups and estimate they may have made almost £15bn of profit from UK customers in 2021 alone.
Apple and Microsoft the world’s two biggest public companies by market value are included while Alphabet is fourth behind oil company Saudi Aramco.
The TaxWatch analysis also included Amazon and Facebook owner Meta (fifth and seventh largest), plus networks company Cisco and Photoshop maker Adobe.
However, international tax rules permit them to shift much of this profit out of the UK so that they were only liable for UK taxes of around £753m.
Using complex tax driven structures, appears to have reduced their UK corporation tax from what would be around £2.8bn – a saving of roughly £2.0bn.
These seven imake limited financial disclosures by country so tracking profits around the world to deduce what is UK sourced proved difficult.
Finding where their UK corporate profits end up was also tricky says the report given the opaqueness of the group structures involving UK and non UK related companies.
Their analysis aims to show the UK tax position that would arise if the UK arms of these global groups declared profits at the same rate as they declare them worldwide, and then calculates the gap between UK Corporation tax on these profits vs any tax payments that they could find from UK resident entities relating to either corporation tax or the new Digital Services Tax.
This then seeks to estimate the extent to which international tax rules deprive the UK Exchequer of significant revenues in respect of global businesses earning profits from British customers.
Claire Ralph, director of TaxWatch, said: “Our analysis, backed up by the recent example of Microsoft’s settlement of UK corporation tax underdeclared over several years, proves how the complex international tax rules can be abused by multinational corporates to shift profits out of the UK tax net.
“We call on the government to remedy the lack of publicly available data about UK corporation tax paid on what taxable profits multinational giants make here.”
