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Facebook, Google and Microsoft ‘avoiding $3bn in tax in poorer nations’

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The aid charity estimates that poorer countries are missing out on up to $2.8bn (£2.2bn) in tax revenue that could be used to tackle the pandemic.

ActionAid is calling for big companies to pay a global minimum rate of tax.

Facebook and Microsoft declined to comment while Google did not immediately respond to a request for comment.

Multinational corporations are currently not required by law to publicly disclose how much tax they pay in some developing countries.

According to ActionAid, “billions” might be at stake that could be used to transform underfunded health and education systems in some of the world’s poorest countries, especially since multiple tech giants have reported soaring revenues during the pandemic.

The aid charity wants to see a new global tax system created, preferably by the United Nations, whereby large corporations are required to pay a global minimum rate of corporate tax reflective of their “real economic presence”.

ActionAid estimates that $2.8bn could pay for 729,010 nurses, 770,649 midwives or 879,899 primary school teachers annually in 20 countries across Africa, Asia and South America.

The aid charity said its research showed that the developing nations with the highest “tax gaps” from Google, Facebook and Microsoft are India, Indonesia, Brazil, Nigeria and Bangladesh.

“Women and young people are paying the price for an outdated system that has allowed big tech companies, including giants like Facebook, Alphabet and Microsoft, to rack up huge profits during the pandemic, while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,” said David Archer, global taxation spokesperson for ActionAid International.

“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 (Google’s owner) and Microsoft would be paying under fairer tax rules could transform public services for millions of people”.

Tax avoidance concerns

There have long been concerns that the biggest corporations do not pay enough tax in developed nations, and re-route profits through low-tax jurisdictions.

Facebook, Google, Apple, and Amazon have all settled disputes with French tax authorities over their operations in the country over the last decade. And the UK in April launched a new digital sales tax aimed at forcing tech giants to pay more on the income they generate inside the country.

In February, Facebook boss Mark Zuckerberg said he recognized the public’s frustration over the amount of tax paid by firms like his.

He added that Facebook accepted the fact it might have to pay more in Europe “under a new framework” in the future and backed plans by think tank the Organization for Economic Co-operation and Development (OECD) to find a global solution.

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