The big American corporates are not safe anymore with their complicated tax structures that let them pay minimum tax . France and India ( vodafone case) have already started taking steps to amend their country legislation to make it harder for big corporates to profit in their country without paying full tax.make money in their country while small business and other countries doe not get their fair share of profits taken from their country.
UK and Australia are currently are looking into the tax strategy known as the Double Irish Dutch Sandwich ( The manoeuvre allows multinationals to move large amounts of money to other subsidiaries in the form of royalty payments )
Google chairman Eric Schmidt has defended the company’s tax policies, saying of the internet giant’s moves to get out of paying billions of dollars: “It’s called capitalism”.
Amazon, Google and Starbucks have been accused of an “immoral” use of secretive jurisdictions and complex company tax structures to avoid paying tax on British profits by a committee of MPs.-http://www.guardian.co.uk
Europe and UK hit hard with the recession have also amended tax laws and intend taking legal action and more scrutiny of tax legislation to claw back more tax from these big American company’s. The US itself is hurting with it not getting much of the tax share even though many of these top Tech companies are originally from the US , but have their head offices in tax saving accounting havens with the result of US also not benefitting much from the profits of these companies.
Apple Inc the tech company everyone knows paid an income tax rate of only 1.9 per cent on its earnings outside the US in its latest fiscal year reports Sbs.com.au
FRANCE has demanded $US252 million ($A242.72 million) in back taxes from Amazon, bringing into spotlight the online retailer over its controversial corporate structure in Europe.
The back taxes that the French are seeking from Amazon relate to earnings in France for the years 2006-10 and “the allocation of income between foreign jurisdictions”
Small, brick-and-mortar retailers have a legitimate gripe that Amazon’s avoidance of the sales tax gives it a competitive advantages
The guardian reports “ Amazon avoids UK taxes by reporting European sales through a Luxembourg-based unit. This structure allowed it to pay a rate of less than 12% on foreign profits last year – less than half the average corporate income tax rate in its major markets.”
The Seattle-based coffee STARBUCKS company has 700 British outlets in UK , but has paid just STG8.6 million in corporation tax in 14 years. Starbucks Corp says this is due to a process involving paying royalties to its European headquarters in The Netherlands – perthnow.com
Amazon and Google confirmed that the companies both use favourable tax jurisdictions – Luxembourg and Ireland, respectively – due to their low taxation levels.
The soul of Google’s (GOOG) international operations is a plush looking office building in Dublin. In 2009 the office, which houses roughly 2,000 Google employees, was credited with 88 percent of the search Company’s $12.5 billion in sales outside the U.S. Most of the profits from various countries surprisingly went to the tax haven of Bermuda and not even the USA.
The Australian government using a combination of beefed up transfer pricing rules and a commitment to setting up a think tank that will review the elaborate tax structures, is making it clear that Google, Apple, Amazon and any other e-commerce giants will need to pay more tax in the future if its doing business on its shores.