Latest results show huge sales growth for tech giants – but still no tax!

Tech giants have profited from the global pandemic, particularly from online shopping but many of them are still not paying a fair amount of tax.

We outline some recent figures and what you can do to help our tax campaigns.

Last year was dominated by the coronavirus pandemic, with many of our high street shops forced to close. Naturally, this led to a boom in online shopping and in February 2021 we can see from the latest quarterly results from their US filings how this has impacted the sales of the tech giants.

We learned that Amazon, for example, recorded UK sales of £19.5bn in 2020, an increase of 51%. Once this pandemic is over however, analysts believe that online shopping will continue due to consumers having become used to buying goods at the click of a button.

Financial engineering

Paul Monaghan, chief executive of Fair Tax Mark, said it was very unlikely that the 50% jump in Amazon’s UK sales would lead to any sizeable increase in UK tax paid because “a good proportion of [Amazon’s UK sales] will be booked in Luxembourg, where they engineered a near €1bn (£880m) loss last year”.

He said the result of this financial engineering would lead to Amazon “racking up hundreds of millions of tax credits that will be used in the future to offset future profits that might have otherwise generated tax contributions”.

In 2019, Amazon received €294m in tax credits across Europe.

It has not only been Amazon whose profits have soared. Apple recorded sales of over $111.44bn in the last quarter of 2020 (a rise of 21%). Shares in US companies generally rose in value by 18% in 2020, with the six companies that make up the tech giants (Amazon, Apple, Facebook, Google, Microsoft and Netflix - the 'Silicon Six') accounting for two thirds of this rise. This is an astonishing figure given how the UK economy contracted by 9.9% last year, the worst decline since the Great Frost of 1709.

The tech giants are, as we know, also prolific tax avoiders, using their size and power as multinational corporations to shift profits and revenues through low-tax or tax-haven countries such as Ireland, Luxembourg and the Cayman Islands. This results in a significant under-payment of tax, with Amazon being one of the worst offenders.

Overall, the six tech giants have been accused of collectively avoiding $100bn (£75bn) of global tax over the past decade.

Not only have the tech giants increased their already enormous wealth during the pandemic, they have also further concentrated their power and engaged in monopolistic practises, such as Amazon forcing the thousands of small sellers who use its platform to use its own logistics service, causing other unionised, logistics companies such as Royal Mail to lose out.

Amazon is well-known to be fiercely anti-union and has engaged in multiple campaigns of intimidation towards workers who try to unionise, such as sending anti-union texts to workers, creating an anti-union website and hosting several anti-union captive audience meetings with workers at the warehouse. Currently, Amazon is engaged in such action against its workers in Alabama, and Ethical Consumer stands in complete solidarity with these workers.

Is there a way to fight back?

Here at Ethical Consumer, as well as our Amazon boycott we have launched a campaign to lobby the UK government to build upon the already existing 2% Digital Services Tax passed in April 2020 and increase it to 10%. Around the world, 36 other countries have already implemented digital services taxes including: Turkey, Canada, The Czech Republic and France.

The money raised from the digital services tax would help to finance the very costly social and health interventions the pandemic has required.

For more information on our Covid-19 Tech Tax Campaign, please follow us on our social media channels and read our articles on how to use your voice.