The UK misses out on an estimated £2 billion ($2.4 billion) in revenue because the way seven of the world's largest tech businesses successfully minimize their tax bills.

Research by campaign group TaxWatch shows the group, including Microsoft, Google parent company Alphabet, Facebook owner Meta and Apple collectively contributed about £750 million ($912 million) to the UK's exchequer in 2021. If profits had not been routed elsewhere in complex - but perfectly legal - tax schemes, the figure would have been closer £2.8 billion ($3.41 billion), according to a study based on the companies' revenue.

Claire Ralph, director of TaxWatch, said: "Our analysis, backed up by the recent example of Microsoft's settlement of UK corporation tax underdeclared over several years, proves how the complex international tax rules can be abused by multinational corporates to shift profits out of the UK tax net.

"We call on the government to remedy the lack of publicly available data about UK corporation tax paid on what taxable profits multinational giants make here," she said.

The study comes on the heels of news that the US Internal Revenue Service sent Microsoft a bill for $28.9 billion in back taxes. The Redmond software giant has vowed to contest the charge.

In February, the Organization for Economic Cooperation and Development set out the technical guidance to help governments implement a global tax floor of 15 percent in a move designed to discourage businesses from offshoring profits to minimize their tax burden in a particular jurisdiction.

The plan has been several years in the making, with goal being to stop mega corporations from moving profits out of certain countries to low-tax havens - thereby avoiding levies. The OECD estimates the project could raise $150 billion in additional annual tax globally.

Whether the move will help the UK bolster tax revenues from Big Tech in the short term is a moot point.

TaxWatch estimates the big seven tech companies accrue £60.5 billion ($74 billion) in revenue in the UK, on which they make an estimated £14.8 billion ($18 billion) in profits. Applying a rough 19 percent corporate tax rate would offer an figure of £2.8 billion ($3.41 billion), while the amount paid by these organizations in UK corporation tax and digital services tax is estimated at £753 million ($916 million).

Microsoft told The Guardian it supported a global approach to tax rules while Meta said it understood the "frustration" about how multinationals were taxed. Amazon contested the findings. saying they were incorrect and based on wrong assumptions. The remainder of the companies - which also included Adobe and Cisco - declined to comment to the publication, which first reported the TaxWatch findings. ®

https://www.theregister.com//2023/10/16/taxwatch_finds_astute_scheme_minimizes/