Tax Big Guns Ready To Fire On Global Corporations

By Tax
Tax Big Guns Ready To Fire On Global Corporations

The British government is about to turn the big guns on corporations earning billions and paying little tax after years of campaigning against wealthy individuals.

Multinationals under scrutiny include popular brands like Amazon, eBay and Facebook.

Global corporations have come under the spotlight after tax gap statistics issued by the Treasury and HM Revenue & Customs revealed a £32 billion shortfall – with billions down to companies managing their tax to pay less in Britain.

eBay, which also owns online money transfer business PayPal, paid just £1.2 million corporation tax on earnings of £800 million through the British subsidiary auction site.

A spokesman told the BBC: “eBay in Europe works with tax authorities and complies fully with all applicable tax laws and regimes – including national, EU, and internationally recognised OECD rules.”

Starbucks ‘no tax’ claim

Coffee house Starbucks brewed sales of £398 million in UK sales last year, but allegedly paid no corporation tax.

Facebook UK paid £238,000 in corporation tax last year, according to accounts filed with Companies House, on sales of £20.4 million.

Many multinational companies route their sales to financial centres with lower business tax rates than the UK – like Ireland.

So, although they have a large presence in this country, their finances are managed elsewhere.

Official figures say the UK tax gap totals £32 billion, with around half the amount due from businesses. Not all is from taxes on profits, a small amount is owed on payroll taxes and national insurance.

£32 billion tax gap

David Gauke, the exchequer secretary said: “These tax gap figures show that the vast majority of people and businesses pay the tax they owe on time. Last year, £468.9 billion was collected, including £13.9 billion brought in through HMRC’s work policing the rules.

“Every pound of tax that is not collected puts a greater burden on honest taxpayers and public services, so the government and HMRC will continue to work together to make it harder for individuals and businesses not to pay the taxes that are due.

“We are determined to reduce the tax gap and have made £917 million available to help HMRC tackle avoidance and evasion.”

There is no suggestion that any company is evading tax by arranging their trading activities in such a way that UK tax is minimised – most exploit perfectly legal loopholes that let them send their finances through different channels to pay in other countries at lesser rates.

Tagged under: