Amazon, Apple and Google face clampdown over shielding profits made in Britain as Treasury targets global giants on tax avoidance
Global technology giants such as Apple, Google and Amazon could soon be charged a tax on their UK activities in an attempt to stop them sidestepping their responsibilities.
Britain is working with nine other countries to draw up shared dossiers on the tax affairs of such groups, it was revealed in Treasury documents released with last week’s Budget.
The Treasury warned that if no joint action could be agreed, it would take unilateral steps to squeeze companies it believed were paying too little tax in Britain.
The policy document said: ‘We will propose supplementary rules to tackle specific issues raised by digitisation if progress on updating the existing international framework fails to materialise.’
Leading tax advisers said it was the first time the Treasury had suggested that it might take unilateral action to quash tax avoidance by the global groups.
‘That would have to mean something like a tax on sales,’ said Bill Dodwell, head of tax policy at accountancy group Deloitte.
The Treasury did not name any companies whose activities were causing it concern, however it is understood to be targeting US giants that trade heavily in the UK but direct the vast majority of their profits through low-tax jurisdictions such as Ireland or Luxembourg to minimise their UK corporation tax bill.
Amazon’s EU base is in Luxembourg and its customers in Britain are treated as buying their goods from there, even if they are distributed from a warehouse in Britain. Profit on sales to British shoppers is accounted for as a profit in Luxembourg.
Apple sells to non-US customers from a base in Ireland, while Google has an Irish business though which the search giant’s UK sales are funnelled.
A Mail on Sunday analysis in 2012 found that Apple, Amazon and Google would have paid more than £600million in corporation tax in 2010 if their sales to British customers had gone through a UK company. They actually paid £15million.
The countries collaborating to tackle tax avoidance include France, Germany, the United States, Australia, China and Japan. Apple and Google declined to comment. Amazon could not be reached.
Credit: This is Money
