/>
X
Business

First Amazon; now Apple, Google in the tax avoiding spotlight

With Amazon exporting its sales operations outside the UK to avoid paying hefty corporation taxes, both Apple and Google have suffered similar accusations.
Written by Zack Whittaker, Contributor on

Apple and Google are next in line to take a beating from the UK taxpayer, only a week after it was discovered that Amazon avoids paying a hefty corporation tax bill in the UK by shipping its sales operations to Luxembourg.

Despite Apple's UK operations pegging around £6 billion ($9.5bn) in earnings, the company only paid a meagre £10 million ($15.9m) in tax to the Treasury's kitty.

The trouble is, the UK is broke, and frankly, we need the cash. Please.

apple-store-cov-garden-igen-zaw2.jpg

In a nutshell, at least in the eyes of the UK government, Amazon is merely a "order fulfilment" and delivery company as its sales operations is based in Luxembourg --- and also a haven for tax ex-pats. Despite only having 134 people working at the Luxembourg headquarters, it reported a 2010 turnover of €7.5 billion ($10.2bn), compared to the UK's turnover of £147 million ($232m).

You can probably see why so many Britons are shaking their fist angrily into the air. For what they do in the UK, they only paid a fraction of the tax they seemingly should have done.

It was only a matter of time before other major names were next, such as Apple, as in similar fashion it outsources vast amounts of its European company outside of the UK to neighbouring Ireland, and only paid a tiny fraction of what it earned back into the UK tax wallet.

But as previously said, until the UK tax authorities say otherwise, the practice is legal in the UK. And while consumers and businesses struggle in the face of austerity and penny-scrimping, major companies are rolling in it and keep getting richer.

Again --- cheers for that, Gordon.

But if the UK thought it was alone, it isn't. As ZDNet's David Gewirtz explained, the U.S. wants a piece of Apple's pie, but the Cupertino-based company keeps about two-thirds of its vast $100 billion cash pile out of the U.S. government's reach.

Google has also been accused of avoiding paying tax by the Daily Mail. But the search giant claims it complies fully with UK law in a statement to sister-site CNET, and that it has "an obligation to our shareholders to set up a tax-efficient structure".

It's small talk for, "we spread our cash around," but if you could, you would. Seeing as I pay around 20 percent tax on my income every year, it's only fair the major companies play ball, too.

What's next? Apple and Amazon aren't breaking the law, and despite opposition from the taxpayer, shaking their fists at the box-packing giant and the shiny rectangle maker, there's close to nothing the government can do about it, except force legislation down Parliament's necks and run the risk of pushing away the technology bigwigs away from the UK.

The Conservative-led coalition government could always crack down on the tax laws so the Treasury reaps the rewards from Silicon Valley's giants operating in the country. But considering that it recently lowered the amount the richest UK citizens pay from 50 percent to 45 percent, thus squeezing the middle-classes even more to accommodate for the leg-stretching of the uber-rich, linen-wearing lefties have been more than sceptical.

Until the UK government does something about the tax-evading problem, Amazon, Apple, and Google will continue to maintain their tax avoidance system. Don't blame them, though. Blame the government for setting up a silly tax system that allows others to exploit the gaps so thoroughly.

But it's only the vast majority of the UK taxpayers suffering, so "not to worry".

Image credit: Simon Wicks/Flickr.

Related:

Editorial standards