Do major tech companies channel profits through offshore tax havens to reduce taxes?
Large technology companies legally reduce taxes by setting up corporate structures that result in large shares of profits being recorded in lower-tax countries such as Ireland, Bermuda or the Netherlands. The practice can reduce the taxes they pay both in the larger foreign markets where they earn revenue and in their home countries.
The OECD calculates that the practice deprives governments of up to $240 billion a year, “equivalent to 4%-10% of the global corporate income tax revenue.” U.K.-based Vodafone booked almost 40% of 2016-2017 profits in tax havens, declaring it made €1.4 billion in Luxembourg, where its effective tax rate was 0.3%.
A U.K. group, Fair Tax Mark, identified a $155.3 billion discrepancy over the years 2010-2019 between cash taxes paid and the expected headline tax rates of Facebook, Apple, Amazon, Netflix, Google and Microsoft.
