Tech Giants Launch Fierce Attack on Global Tax Reform Plans

Tax reform plans aimed at stamping out artificial corporate structures used to avoid tax have come under fire from powerful US tech multinationals. Google, Amazon, Apple, and other leading tech companies have condemned the proposed changes as "riddled with fundamental flaws" and called for parts of the plan to be rejected. The joint feedback submission, made on behalf of five leading US tech industry trade bodies, argues that the changes would be too costly and lead to confusion and dispute.

Key Takeaways:

• The US tech industry trade bodies, representing companies such as Google, Amazon, and Apple, have launched a fierce attack on global tax reform plans aimed at stopping artificial corporate structures used to avoid tax.
• The joint feedback submission argues that the proposed changes are "riddled with fundamental flaws" and would be too costly, leading to confusion and dispute.
• Google made $5.64bn in revenues from customers in Britain in 2013, though almost all of that was booked in the accounts of the group's Irish operations.
• Amazon's UK company, which operates its warehouses and supports sales and buying activities, reported turnover of £449m for 2013 and a tax charge of £4.2m.
• 33% of corporate respondents in a 2013 PricewaterhouseCoopers survey were facing a dispute with a tax authority over whether or not one of their subsidiaries was tax resident in a certain country.
• George Osborne's "diverted profits tax" (also known as the "Google tax") aims to stop big technology companies artificially avoiding UK corporation tax, but its effectiveness remains to be seen.
• The joint feedback submission claims that the changes would lead to "confusion and dispute" and would be too costly for companies to implement.
• The submission argues that parts of the plan "must be rejected" due to these "fundamental flaws".
• The tech industry trade bodies claim that the changes are "not fit for purpose" and would have unintended consequences for companies.

Statistics:

• Google made $5.64bn in revenues from customers in Britain in 2013, or 9.4% of its global total.
• Amazon attributed $7.29bn of its net sales in 2013 to the UK, though almost all of that sum was website transactions booked by the group's European trading hub in Luxembourg.
• 33% of corporate respondents in a 2013 PricewaterhouseCoopers survey were facing a dispute with a tax authority over whether or not one of their subsidiaries was tax resident in a certain country.
• Amazon's main UK company, which operates its warehouses and supports sales and buying activities, had reported turnover of £449m for 2013 and a tax charge of £4.2m.
• Google's main British company, which sells marketing support services to Ireland, reported turnover of £642m and paid tax of £21.6m.

Sources:

• The Guardian
• PricewaterhouseCoopers