Seven large tech groups estimated to have dodged £2bn in UK tax in 2021

16th October 2023

• £60.5bn estimated UK revenues
• £14.8bn estimated UK profits
• £2.8bn estimated corporation tax @ 19%
• £753m estimated UK corporation tax and digital services tax paid
• £2.0bn estimated UK tax avoided

Introduction

TaxWatch’s analysis of seven large US-based technology groups estimates that they may have made almost £15bn of profit from selling to UK customers in 2021. However, their complex tax-driven structures appear to have enabled them to move these profits out of the UK so that they were only liable for UK taxes of around £753m. TaxWatch estimates that without these structures these seven companies would have paid around £2.8bn in UK tax and that by using them they may have avoided tax of roughly £2.0bn.

Corporation tax is a tax on corporate profits. Under international principles of taxation a country has the right to tax companies on the profits that arise in their jurisdiction, even if the company is headquartered overseas. However, it is common practice for many multinational companies to move profits from higher tax countries to lower tax countries via a series of complex financial transactions. For that reason, the accounting profit declared in the UK accounts of many multinational companies is not always an accurate reflection of the real economic profit made by the company from its activities in the UK.

Here we consider how much UK tax these global groups would have paid  if the UK arms of these global groups declared profits at the same rate as they declare them worldwide. TaxWatch estimated the total revenue made by these companies in the UK, and applied the company’s global pre-tax profit margin to that revenue. The pre-tax profit margin is the proportion of revenues that is declared as profit before taxes are deducted.

At no point do we suggest that the figures presented here are accurate and an exact answer to how much profit these companies make in the United Kingdom. That would be impossible to determine without access to detailed figures from inside these companies, which we do not have. However, we do argue that our approach gives a more realistic estimate of the profits made by these companies in the UK market. All the companies mentioned in this report have been approached for comment.  The companies that responded to us said that they paid the correct tax in all jurisdictions and Amazon stated that our conclusions were inaccurate and based on incorrect assumptions

The problem

The aim of this analysis is to identify roughly the corporation tax that would be paid in the UK by global technology multinationals if the profit rate declared in the UK in relation to transactions with UK customers matched the globally declared profit rate.

Current international tax rules generally work on the basis that profits are allocated based on where value is created, which is not necessarily the same as the location of customers. Most international businesses will therefore argue that our methodology overestimates the true profits made in the UK on the basis that the value of their products are largely created outside the UK.

UK legislation follows these rules and taxes businesses on profits arising in the UK but the interpretation of what income arises in the UK and the expenses that can be deducted from them is complex. Global businesses can organise the structure and activities of each of their subsidiaries to move sales, costs and thereby profits and losses between different jurisdictions. This enables them to leverage differences in tax rates and laws between the countries within which their subsidiaries operate. This form of tax avoidance is known as profit shifting and is recognised as a major problem in the OECD through their Base Erosion and Profit Shifting (BEPS) project¹Investigation into the Digital Services Tax, National Audit Office, 23 November 2022, https://www.nao.org.uk/wp-content/uploads/2022/11/Investigation-into-the-digital-services-tax.pdf .

This has been much debated in the recent OECD negotiations for taxing of international corporations²Inclusive Framework on Base Erosion and Profit Shifting, Organisation for Economic Cooperation and Development, https://www.oecd.org/tax/beps/ . The UK Treasury specifically identified that, for digital companies like many of those we are looking at, methods for identifying where that value is created did not take into account value generated by customers³Corporate tax and the digital economy: position paper update, HM Treasury, March 2018, … Continue reading. This discussion resulted in the interim digital services tax (DST), a 2% charge on income arising in the UK from certain digital services, in addition to corporation tax, which was introduced in April 2020 in the UK⁴Investigation into the Digital Services Tax, National Audit Office, 23 November 2022, https://www.nao.org.uk/wp-content/uploads/2022/11/Investigation-into-the-digital-services-tax.pdf . Similar charges were also introduced in a number of other European countries. The debate shows that the current approach to taxing international corporate profits is open to challenge and our computations demonstrate the differences that could arise using one particular scenario.

TaxWatch has regularly reported on the tax position of major US technology companies in the UK and on the controversial arrangements they make to reduce taxes paid both here and elsewhere in the world. Both national governments and international organisations have struggled to find a way to make sure tax on profits from global businesses are paid fairly. There have been changes to legislation that attempt to tackle these problems with further changes planned. However, from the limited evidence publicly available, it seems that many global businesses are still not paying UK tax commensurate with the profits they make here.

Here we update previous reports of estimates of tax that would be due on this basis by seven of the big technology multinationals and look at some of the issues involved.

Methodology

Our methodology assumes that, from an economic point of view, the UK market has an average level of profitability compared with all other markets these companies operate in, including their domestic market, the US.

It also assumes that the costs of the company, from research and development to manufacturing and other functions are allocated equally between different markets.

This report focuses on profits made in years ending during 2021 which is the most recent year for which all data is available. Most technology companies benefited greatly during this period from the move to online working, socialising and shopping during the pandemic.

The general process for each international group was as follows:

• Identify the global profit before tax rate (i.e. the profit as a percentage of total income) from the group accounts filed to US authorities in the form known as a 10-k.

This data is publicly available in all cases.

• Identify total UK sales made by the group.

This information is not always publicly available from the group so different sources and methods have been used which are explained in each group calculation.

• Apply the global profit rate to the UK sales figure to arrive at an estimate of UK profits.

We believe that this is a reasonable approach as the UK is an established market in all cases so likely to have a profit rate at least in the region of the total group profit margin.

• Apply UK corporation tax rate to the estimated profits to arrive at an estimate of the UK tax that would arise on this basis.
• Identify group subsidiary companies and other entities operating in the UK and use UK accounts information to estimate profits and tax declared in the UK.

See below for difficulties with this.

• Compare the two figures to identify the difference between tax on declared profits and that which would arise under our methodology.
• To arrive at the total UK tax potentially avoided across all seven groups we have also credited them with estimated Digital Services Tax paid in the year (see below for explanation)

Other points to note:

Average HMRC exchange rates for either the year to 31/3/21 or the year to 31/12/21 have been used, whichever are closest to the year end used by the companies for accounting purposes.

Occasionally UK company accounting periods don’t match with the parent company’s so adjustments have been made where appropriate.

In most cases it is very difficult to identify all subsidiary companies registered in the UK, and therefore liable for UK corporation tax. This is because there are generally no published group structures and company names don’t necessarily match the group name, eg. not all Amazon group companies have Amazon in the name. UK tax paying subsidiaries have been identified where possible by checking other directorships of the main company directors at Companies House. This cannot be guaranteed to identify all relevant companies.

The calculation of the UK corporation tax charge is also limited by the fact that some groups have overseas companies which operate through a ‘permanent establishment’  in the UK. This is a fixed place of business in the UK such as a branch, an office, a factory or a workshop. These entities are required to register at UK Companies House and are referred to as a ‘branch’ or an ‘establishment’ depending on when they were registered. They are required to make returns to HMRC of the profits from that branch or establishment but this data is not publicly available so it is impossible to know what proportion of the total company profits have been allocated to the UK. In some cases they do not submit the full company accounts to Companies House at all. Comments have been made in each group section below where relevant.

The complexities of taxation and interaction with accounting policies means that a figure for UK corporation tax paid is difficult to arrive at with any certainty, hence using a straight 19% of profits before tax. There are many ways that the profit figure will have been adjusted to take into account specific tax legislation. For example, differences arise between tax deductions for capital allowances and accounting deductions for depreciation for fixed assets in relation to the same expenditure. There is also a variety of legislation which applies to international businesses such as transfer pricing (i.e. the requirement to apply arm’s length terms to transactions between connected parties) and anti-avoidance legislation designed to prevent profit shifting such as that relating to Controlled Foreign Companies (CFCs) and the Diverted Profits Tax (DPT). We have also not made any adjustments for losses within group companies that might have been set against profitable subsidiaries to reduce tax liabilities. Overall we therefore feel we have been generous in the UK tax credited to the groups based on the information we can obtain.

We recognise that most of these companies will also have been liable for the new Digital Services Tax (DST) in this period. It therefore seems reasonable to credit them with the estimated amount arising under this legislation. This relates to revenue earned after 1 April 2020 and applies to businesses that provide a social media service, search engine or online marketplace to UK users. The DST criteria mean that only the very largest global technology businesses are subject to the 2% charge on UK incomes (as opposed to profits).

In 2020/21 a total of £358m was paid in DST. Within this, a group of five multinational enterprises (MNEs) contributed £324m, i.e., around 90% of the total⁵Investigation into the Digital Services Tax, National Audit Office, 23 November 2022, https://www.nao.org.uk/wp-content/uploads/2022/11/Investigation-into-the-digital-services-tax.pdf . While not disclosed by HMRC, it seems likely that these five are Amazon, Alphabet (Google), Microsoft and Meta (Facebook) and Apple. While the DST period covered does not match most of the accounting periods it is a rough annual estimate of additional amounts arising. It is impossible to estimate the DST for individual groups but we have also credited our technology companies with the total DST paid by five companies as a way of recognising that further amounts have been paid by these businesses.

Any numbers that do not match exactly are due to rounding.

 

Results

 

Adobe

In 2020 Adobe Inc’s UK revenues were 6.8% of the total group income. The 10-k for 2021 does not provide UK data so we have applied that percentage to the total 2021 revenue figure to arrive at an estimate of UK income of £788m. Using the global profit margin of 36.1% would result in a UK profit of £285m. Applying the 19% tax rate gives an estimated tax charge of £54m.

Applying the 19% tax rate to Adobe’s actually reported UK profits (in Adobe Systems Europe Ltd accounts) produces a tax charge of around £3m, i.e.  potentially avoiding around £51m in UK tax.

Adobe responded to our request for comment saying:

“Adobe complies with the tax laws in all of the countries in which it does business. Adobe is committed to compliance with the relevant tax laws, regulations, and treaties in every country and jurisdiction in which the company operates.”

Amazon

Amazon’s 2021 10-k (Amazon.Com Inc) shows a global profit margin of 8.1% and UK revenues of £23.3bn which suggests UK profits before tax of £1.9bn. Applying the 19% corporation tax rate produces a tax charge of £359m.

There are two branches of Luxembourg companies which register UK branches at Companies House but do not produce public returns for the branch (though a return will be made to HMRC). Amazon EU Sarl is the European retail business. The accounts for 2021 show income of €51bn but, after costs of raw materials and consumables at €37bn, include a deduction of €15bn described as ‘Other external expenses’. Further details explain that this includes the provision of services from affiliated undertakings, i.e. other companies in the international group. This deduction appears to tip the company into a loss of around €2bn before tax but there is no detail about what the services are or which countries the affiliated undertakings are registered in. This is an example of how it is impossible to understand where income and costs are allocated within the group and therefore to analyse whether this is appropriate. As a result of the overall loss in 2021 it is assumed that the UK branch did not pay any UK tax.

Amazon Web Services EMEA Sarl is the other Luxembourg company. This did make profits and shows a total €36m tax paid. However, it has branches in all parts of Europe and the Middle East so it’s likely that any tax paid in the UK is only a small portion of this. No amounts have been included in the UK tax figure for these branches.

There are also a large number of UK Amazon subsidiaries — many appear to be companies which they have recently bought. Applying a 19% tax rate to their total UK declared profits suggests a tax charge of £50.6m.

Using our methodology we estimate around £308m in UK tax may have been avoided.

In response to our request for comment, an Amazon spokesperson challenged- our methodology and pointed to other UK taxes it paid such as VAT and employer’s National Insurance Contributions. He said:

“The conclusions of this research are inaccurate, and based on several incorrect assumptions. During 2021, our International consumer business⁶The retail sales business outside the United States was loss-making, so ascribing a global operating margin to the UK business is not appropriate. We disclosed last year that our total tax contribution in the UK was £2.77 billion during 2021 – £648m in direct taxes⁷Directly incurred taxes: the taxes that are directly incurred and payable by Amazon, including Employer National Insurance, Business Rates, Corporation Tax, Import Duties, Stamp Duty Land Tax and … Continue reading and £2.13bn in indirect taxes⁸Indirect taxes collected: the taxes we collect and remit from our customers, employees, and other third parties because of our business activities in the UK. These include VAT and the taxes paid by … Continue reading. When compared to the most recent PwC Total Tax Contribution survey of the 100 Group, Amazon ranks in the top 15 largest UK taxpayers for taxes borne and taxes collected.”

Alphabet (Google)

Google (Alphabet Inc) has not reported UK revenues in its US 10-k filing since 2016. A recent Competition and Markets Authority (CMA) report into Google and Apple obtained figures from Google for total UK revenue of between £10-15bn for 2021⁹Market study into mobile ecosystems: Appendix C, Competition and Markets Authority, 15 June 2021, … Continue reading. We have therefore used the mid-point at £12.5bn as an estimate of UK revenue for 2021.

Applying the global profit rate of 35% to UK revenue  suggests UK profits of £4.4bn. Applying a tax rate of 19% would produce a tax charge of around £836m.

Google has a subsidiary registered in Ireland,  Google Commerce Ltd. This company has a UK establishment registered at Companies House. As explained above, it is assumed that this company reports profits of the UK establishment to HMRC. Although it appears that Companies House should require submission of annual accounts for this establishment¹⁰File accounts in the UK as an overseas company, Gov.uk, https://www.gov.uk/file-accounts-in-the-uk-as-an-overseas-company ,  the last submitted accounts at Companies House are for 2014 so it is impossible to know how much, if any, tax is currently paid in the UK.

Applying the 19% tax charge to profits reported at Google UK Ltd (by far the largest of the UK subsidiaries), along with all  other identified UK Google companies, produces a tax charge of around £146m, i.e. potentially avoiding around £691m in UK tax.

Alphabet did not respond to requests for comment.

Cisco

The accounts of Cisco International Ltd (UK) report separately on the revenues the company makes from UK sales, which were £1.5bn in 2021. Cisco’s global accounts (Cisco Systems, Inc) show a pre-tax margin of 26.6% which would give rise to profits on UK revenues of £408m.

Applying the 19%  tax rate, produces a tax charge of roughly £78m.

NDS Holdings BV in the Netherlands is a Cisco subsidiary which registers a UK establishment. Again this is assumed to make returns to HMRC. However, despite Companies House requirements referred to above,  the last accounts submitted to Companies House are for 2017, so it is impossible to know if any UK tax is paid through this establishment.

Cisco International Ltd is the largest UK company. Applying a 19% charge on the profits reported by this and other UK subsidiaries gives a UK tax charge of £28m, i.e. potentially avoiding around £49m in UK tax

A Cisco spokesperson said they did not wish to comment.

Meta (Facebook)

Meta’s business is made up of three main elements – Facebook (by far the largest), Instagram and WhatsApp.

The group publishes the average revenue per user (ARPU) for Facebook only, by region, in their 10-k¹¹Form 10k, Meta Platforms Inc, y/e 31 December 2021,  https://www.sec.gov/ix?doc=/Archives/edgar/data/0001326801/000132680122000018/fb-20211231.htm P58 so only provide figures for the whole of Europe. A recent Competition and Markets Authority (CMA) report estimated Facebook’s ARPU in the UK for 2019 at £50-60¹²Market study into mobile ecosystems: Appendix C, Competition and Markets Authority, 15 June 2021, … Continue reading so we have taken an average of £55. The Meta Platforms, Inc.10-k shows Facebook’s European ARPU has increased by 56% from y/e 31 December 2019 to y/e 31 December 2021. Applying this same percentage to the UK estimate gives a 2021 estimate of around £85.85. Facebook’s number of users in the UK in 2021 was estimated at 50.5m¹³Facebook users in United Kingdom, NapoleonCat, June 2021, … Continue reading giving UK revenues of £4.3bn.

Without details of similar increases for Instagram we have used the estimated 2019 ARPU figures from the CMA report. We believe that this will give conservative estimates as ARPU almost certainly increased, particularly bearing in mind social media use during the pandemic. ARPU of £25 (average of £20-£30 referred to in CMA report¹⁴Market study into mobile ecosystems: Appendix C, Competition and Markets Authority, 15 June 2021, … Continue reading) applied to 27.25m users in 2021¹⁵Instagram users in United Kingdom, NapoleonCat, August 2021, https://napoleoncat.com/stats/instagram-users-in-united_kingdom/2021/08/ gives revenue of £681m.

For WhatsApp, European ARPU is estimated at £0.88 (converted from $1.21¹⁶WhatsApp business average revenue per user in 2021, by region, Statista, July 2022, https://www.statista.com/statistics/1308746/whatsapp-business-arpu-by-region/ ) in 2021 with users of 40.41m¹⁷WhatsApp users warned the app could be leaving the UK for ever, Oh My Mag,11 May 2023, … Continue reading to give revenue of £36m –  this is a small proportion of the total estimated UK revenue so the lack of UK figures is unlikely to impact greatly.

The total of these three elements suggests total UK revenue of £5.05bn. Applying the global profit margin of 40% gives a UK profit of £2.03bn. Applying 19% tax rate to this gives a UK tax charge of £385m.

There only appear to be a small number of Meta entities registered in the UK with Facebook UK Ltd by far the largest. The only other one which appears to pay tax is Unit 2 Games Ltd but that was only purchased by the group in June 2021. We have included tax on the total profits of this company in our calculation despite the fact that there is an argument that only part of the year  should be  attributed to Meta.

There is an Irish Meta company, Edge Network Services Ltd, which has a UK establishment. Again it is not clear why, but the last accounts submitted were to 2019 and showed profits of only €36m, so it seems unlikely that tax on the UK establishment would hugely affect our figures.

Applying 19% to total UK profits declared produces a tax charge of £55m, i.e. potentially avoiding around £330m in UK tax.

In response to our request for comment, a Meta spokesperson responded:

“Over the last year we’ve continued to invest in the UK, including opening a new office campus in King’s Cross. While we paid $8.52 billion in corporation tax globally last year, and our average effective tax rate over the last decade was around 20 per cent, under current rules the vast majority of this is paid in the US. Although we pay the required level of taxes under international tax rules, we understand there’s frustration about how multinational companies are taxed and have long called for reform of the global tax system. We hope to see further progress towards implementing the OECD’s tax agreement which could mean companies like Meta paying more tax, and in different places.” –

Microsoft

Microsoft have changed the way they recognise income in the UK in recent years and now have a Limited Risk Distributor Model. This is an arrangement where they buy products from other group companies and sell on to UK customers at a low profit margin on the basis that the UK company takes little risk. The turnover shown in Microsoft Ltd (UK) is therefore the revenue earned from UK customers.

The global profit margin shown in the Microsoft Corp10-k is 42%. Applying this to UK sales shown in Microsoft Ltd of £4.9bn would give UK profits of £2.1bn. Tax at 19% on this would be £391m. (There are a large number of other Microsoft subsidiaries registered in the UK which would not be taken into account in the above figure so it seems likely that overall profit in the UK should be more than the figure above.)

We calculated the tax position on declared profits from all of the UK subsidiaries where we can identify a profit. However, when the analysis was carried out in early 2023, there were a significant number that had not submitted 2021 accounts to Companies House (despite filing deadlines meaning they are late)¹⁸Some of those accounts may now be available but our calculations have not been updated. This is another example of the difficulty in arriving at a true picture of the position..   In addition, some are designated as small companies so do not include a profit and loss account. The latter are unlikely to have much impact on the final figures and most of the former do not seem to be that large from earlier accounts so no adjustment has been made for either of these groups.

Applying 19% tax rate to available profit figures declared in the UK produces a tax figure of £56m, i.e. potentially avoiding around £334m in UK tax.

Microsoft confirmed they had no comment to make when asked for a response.

Apple

Apple do not publish any figures for their UK revenue. However, the Competition and Markets Authority (CMA) also looked at Apple and estimated their UK turnover in 2021 as £10-15bn¹⁹Market study into mobile ecosystems: Appendix C, Competition and Markets Authority, 15 June 2021, … Continue reading so we have used the mid-point, £12.5bn for the purposes of our calculation. Apple Inc.’s 10-k filing for 2021 shows a profit before tax margin of 30% indicating UK profits of £3.73bn.

Taxing that at 19% would give rise to a tax charge of £709m.

A 19% charge on the declared profits of the three main Apple companies paying tax in the UK (Apple (UK) Ltd, Apple Europe Ltd, and Apple Retail UK Ltd) would be £140m.

Using our methodology we estimate around £569m in UK tax may have been avoided.

Apple did not respond to requests for comment.

 

Summary of estimated potential tax avoided £000s

 

	Adobe	Amazon	Google	Cisco	Facebook	Microsoft	Apple	Total
UK Estimated Revenues	£788,023,314	£23,297,220,000	£12,500,000,000	£1,534,149,020	£5,052,461,824	£4,861,627,000	£12,500,000,000	£60,533,481,158
Estimated Profits on UK Revenues	£284,806,652	£1,891,806,344	£4,402,220,954	£408,404,278	£2,025,800,311	£2,056,490,665	£3,731,613,074	£14,801,142,279
UK Estimated Tax Liability	£54,113,264	£359,443,205	£836,421,981	£77,596,813	£384,902,059	£390,733,226	£709,006,484	£2,812,217,033
Current UK Tax Charge	£3,264,000	£50,615,381	£145,777,909	£28,368,323	£54,663,405	£56,436,787	£139,836,000	£478,961,805
Estimated UK Tax Avoided	£50,849,264	£308,827,824	£690,644,072	£49,228,490	£330,238,654	£334,296,439	£569,170,484	£2,333,255,228

 

We estimate that these multinational enterprises have potentially avoided around £2.3bn in total UK tax by moving their profits to other jurisdictions. Even if we credit them with the £324m DST estimated in that year, this still leaves around £2.0bn of UK tax not paid on profits earned from UK customers (see table below).

 

DST for 5 companies	£324,000
Total tax paid including DST	£802,962
Estimated potential tax avoided	£2,009,255

 

Issues/analysis

Domestic and international bodies have been trying to resolve some of the issues that arise out of multinational enterprises shifting profits to reduce tax paid for some years, with the OECD BEPS project intended to have a global impact.

In a previous report  we recognised how most of the groups we look at pay significant taxes in the US but don’t appear to pay appropriate taxes on their profits from customers outside the US in the countries where they operate. That report explained changes in US tax legislation which have resulted in some multinationals changing how they allocate their profits around the world. A number of them appear to have repatriated significant profits from elsewhere in the world to the US in return for reduced taxes. While these changes were apparently expected to result in the groups investing more in the US, it appears that the outcome for the big tech companies has actually been significant buy back of shares²⁰The Silicon Six and their $100 billion global tax gap, Fair Tax Mark, December 2019, https://fairtaxmark.net/wp-content/uploads/2019/12/Silicon-Six-Report-5-12-19.pdf P9 which results in a greater return for shareholders in future rather than increased investment. Obviously none of this will improve the tax paid on profits made in the UK.

Part of the problem with trying to analyse this issue is that group structures and activity are opaque meaning little concrete information is available to even be certain of the size of the problem. Amazon is the only one of these companies which provides information about total income from UK customers. Part of the OECD BEPS project involves a requirement to provide data on revenue and profits etc by jurisdiction for multinational enterprises above a certain size²¹BEPs Action 13: Country by country reporting, Organisation for Economic Cooperation and Development, https://www.oecd.org/tax/beps/beps-actions/action13/ known as ‘country by country reporting’. Despite a vote by UK MPs in 2016 empowering ministers to require this data to be made public, that power has not yet been used. This means that this data is currently only available to UK authorities. However, the EU are working towards a requirement to publish this data, aiming to start in 2024. There was potential for this requirement to be introduced in Australia later this year but this has recently been watered down and delayed until July 2024²²Scaling back tax disclosure rules a lost opportunity for Australia, Financial Review, 11 July 2023 … Continue reading.  The availability of such data would make the calculations carried out in this report much more certain and enable more informed debate about the issue.

As referred to above, the UK DST was introduced for the year to March 2021 in an attempt to rebalance, to a small extent, the contribution to the UK purse by these groups prior to new OECD rules. However, affected businesses had different reactions to the introduction of DST with Amazon and Google increasing their charges by 2% to cover the cost but Microsoft and Facebook  absorbing the increase in tax²³What the digital services tax means for online advertisers, Mediaworks, 29 October 2020 https://www.mediaworks.co.uk/insights/news/digital-services-tax-what-it-means/  . This raises the argument that instead of groups paying a more appropriate level of UK tax, the DST has effectively become an additional tax on businesses using the Google and Amazon platforms. Bearing in mind their dominant market share position, they are presumably confident enough to believe that increased charges will not affect their customer base, which demonstrates the difficulty in making unilateral taxing decisions against global corporations.

The NAO identified that in some cases groups paid more in DST than in Corporation Tax²⁴Investigation into the Digital Services Tax, National Audit Office, 23 November 2022, https://www.nao.org.uk/wp-content/uploads/2022/11/Investigation-into-the-digital-services-tax.pdf   which suggests a general success story but across the seven groups this still doesn’t produce UK payments anywhere near what we estimate could be due. In addition, this legislation will end if and when Pillar 1 of the OECD BEPS (Base Erosion and Profit Shifting) changes is introduced in the UK. Pillar One is intended to redistribute some profits to countries in which multinational enterprises operate thereby mitigating some of the profit shifting we are discussing here. TaxWatch has previously compared DST and Pillar One rules and concluded that the rules for Pillar One will result in a lower charge than the DST for most of the tech companies we are looking at. This indicates that, despite lengthy international debate, the planned changes are unlikely to result in UK contributions proportionate to their apparent levels of UK profits.

At this stage it can only be hoped that the country by country reporting regime will allow greater public scrutiny of the problem in future.