10 biggest multinational offenders evading taxes in the UK
The brands are known worldwide, and even though global companies like Google, Amazon, and Starbucks make billions — they pay little or no taxes at all in the UK and other markets where the firms make a majority of revenue and profits.
Companies like Microsoft, Twitter, and Apple don’t set up their headquarters in their main European markets (usually France, Germany, Austria, or the UK), but instead, report sales in Europe’s tax havens: Ireland, Switzerland, and the Netherlands.
Currently, multinational corporations are taxed based on profits, and not sales. This means that companies operating in the UK, such as Google, can sell millions in products, but then siphon off the revenues to Ireland and other tax havens, where corporate tax rates are lower.
It’s called double dipping.
Ireland offers a tax rate of 12.5 percent, compared to 40 percent in the US, and 20 percent in the UK. The Cayman Islands and the British Virgin Islands offer an even better deal – 0 percent.
Over the past years, governments worldwide have lowered corporate tax rates to lure companies away from tax havens. In 1982, corporate tax was 52 percent, now it is down to 20 percent in the year 2016. But even this doesn’t keep big brands away from tax havens, where they can save billions by avoiding paying taxes to the US and UK governments.
Facebook may be the worst offender. In 2014, the social media giant only paid £4,327 in UK corporate taxes on £700 million in revenue. Around in the world, Mark Zuckerberg’s company, which dodges taxes with an office in the Cayman Islands, paid $123 million in corporate taxes, or about 3.6 percent of its $3.4 billion in profits outside of the United States.
Apple has been accused of hoarding more than $8 billion in taxes over the years. America’s largest company holds $180 billion in offshore profits, and according to a recent SEC filing, would have to pay $60 billion in taxes if it ever tried to repatriate, or bring back the money, to the US.
Google most recently made headlines for striking a deal with Britain’s HMRC to only pay £130 million in taxes on an estimated £7.2 billion is has earned in over the past ten years. After the United States, the UK is Google’s largest market and accounts for 11% of global revenues.
Amazon got away with paying just £11.9 million in tax after announcing profits of £34.4 million in 2014.
Starbucks has only paid £8.6 million of tax over 14 years between 1998 and 2012 on sales of £3 billion.
Uber is the latest company to come under the microscope for its tax practices. The taxi-hailing service only paid 2.5% in corporate taxes last year: £22,000 in taxes on £866,000 UK profit. The company recorded its taxes in the Netherlands.
Shell got away with paying absolutely no British taxes in 2014, siphoning off its £19.87 billion in global profits to its Switzerland holding as well as Bermuda, a notorious tax haven.
Vodafone, which has an office in Luxembourg, also paid no UK corporation tax during the 2014-2015 financial year, when it posted £1.3 billion in earnings and a £41 million profit.
AstraZeneca, a pharmaceutical company, also got away with paying 0 taxes in 2014 for the same reason Vodafone did, the company saying it had “no taxable profits”
SABMiller, the brewer recently bought by US Anheuser-Busch InBev (AB InBev), also said it had paid no UK taxes in the last financial year (ending March 31 of 2015).
Most people refer to the tricky loophole as “tax avoidance”, and the companies themselves as “tax dodgers”, but under the law, everything the companies are doing is technically legal. For now.