Big tech accused of avoiding $2.8bn in tax to poorest countries

Big US technology companies are exploiting loopholes in global tax rules to avoid paying as much as $2.8bn (£2.1bn) tax a year in developing countries, according to research by the anti-poverty charity ActionAid International.

Facebook, Google and Microsoft have been accused of failing to pay a fair amount of taxes in poor countries where governments are struggling to provide even basic healthcare or education to their citizens.

ActionAid International said its research showed the income lost from the “tax gap” could have been used to pay for more than 700,000 new teachers or 850,000 primary school teachers.

There is no suggestion that the tech firms are breaking the rules or actively evading tax. ActionAid said the potential taxes are being lost due to world leaders’ failure to implement global standards on tax that would force multinational companies to pay more tax in the countries where they generate their income.

“Little is known about how much tax these companies are currently paying in developing countries, as they are still not required to publicly disclose this information,” ActionAid said. “This research shows, however, that billions could be at stake in the long overdue reform of international corporate taxation – enough to transform underfunded health and education systems in some of the world’s poorest countries.”

David Archer, global taxation spokesman for ActionAid International, said: “Women and young people are paying the price for an outdated system that has allowed big tech companies, including giants like Facebook, [Google parent] Alphabet and Microsoft, to rack up huge profits during the pandemic, while contributing little or nothing towards public services in countries in the global south.

“The $2.8bn tax gap is just the tip of the iceberg – this research covers only three tech giants. But alone, the money that Facebook, Alphabet and Microsoft would be paying under fairer tax rules could transform public services for millions of people.”

India, Indonesia, Brazil, Nigeria and Bangladesh are the countries with the highest tax gaps involving these three companies. The World Health Organization estimates that the 20 countries studied by ActionAid need to employ at least 1,790,000 more nurses by 2030 to achieve their benchmark of 40 nurses per 10,000 people. These shortages could be fully covered in just three years if global tax rules allowed fair taxing of these three big tech companies and the revenue was allocated for this purpose.

The technology companies have not responded to requests for comment.

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