Silicon Six: Three ways to close big tech’s enduring tax gap
Six of the world’s largest technology companies have paid rates of corporate income tax well below headline tax rates around the world, a new report from the Fair Tax Foundation has found.
The report, The Silicon Six and their enduring global tax gap, examines the tax conduct of the Silicon Six (Alphabet/Google, Amazon, Apple, Meta/Facebook, Microsoft and Netflix) over the past decade. It is a variation of analysis we last undertook in 2019 and 2021.
While headline rates of tax averaged 29.7% in the United States and 27.0% worldwide over the past ten years, the report finds the Silicon Six have been subject to just 18.8% corporate income tax across the globe. This amounts to a gap of $277.8bn over that period.
The report also finds a $82.1bn gap between the current tax provisions and the corporate income cash taxes actually paid.
These six businesses dominate digital infrastructure and services across many parts of the world. Together, they have a combined market capitalisation of $12.9tn and are worth more than the entire FTSE 100 and Euro Stoxx 50 combined. They also exert enormous political influence as well as economic power: spending $115mn directly lobbying government in the United States and European Union in 2024.
Although the Fair Tax Foundation celebrate responsible corporate tax practices, we also push for a business environment in which companies can compete fairly. That cannot be achieved if some of the largest companies are not paying their fair share of corporate tax.
“We largely leave the naming and shaming to others,” said Fair Tax Foundation CEO, Paul Monaghan.
“However, the sheer economic and political enormity of the Silicon Six requires extra attention and discussion – not least, the question of whether they are making a ‘fair tax contribution’ around the world.
“Our analysis would indicate that tax avoidance continues to be hard-wired into corporate structures. The Silicon Six’s corporate income tax contributions are, in percentage terms, way below what sectors such as banking and energy are paying in many parts of the world.”
Recommendations to close the enduring tax gap
The report makes three recommendations. Because much of the Silicon Six’s overseas revenue is subject to ‘tax haven’ level rates of corporate tax in the United States via a tax break for foreign-derived intangible income, the report recommends the United States end this tax break and embrace the OECD’s Global Minimum Tax of 15%.
Some countries are starting to introduce public Country-by-Country Reporting, in which a company’s profits and losses are shown in each country they operate. The report recommends more adopt this transparency measure as it would identify any aggressive profit shifting.
Finally, the report recommends countries give more serious consideration to the degree to which the Silicon Six’s overseas revenue is subject to low levels of corporate tax and develop more assertive responses to ensure that a fairer tax contribution is secured and so that more equitable business competition can operate within their jurisdictions.
Find out more here and access the full report.
