• £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
In today’s new report, we analyse seven large US-based technology groups and estimate they may have made almost £15bn of profit from UK customers in 2021 alone. However, international tax rules permit them to shift much of this profit out of the UK so that they were only liable for UK taxes of around £753m. Using complex tax driven structures, appears to have reduced their UK corporation tax from what would be around £2.8bn – a saving of roughly £2.0bn.
These seven international groups make limited financial disclosures by country so tracking profits around the world to deduce what is UK sourced proved difficult. Finding where their UK corporate profits end up was also tricky given the opaqueness of the group structures involving UK and non UK related companies.
Our analysis aims to show the UK tax position that would arise if the UK arms of these global groups declared profits at the same rate as they declare them worldwide, and then calculates the gap between UK Corporation tax on these profits vs any tax payments that we could find from UK resident entities relating to either corporation tax or the new Digital Services Tax. In doing so we seek to estimate the extent to which international tax rules deprive the UK Exchequer of significant revenues in respect of global businesses earning profits from British customers.
This new analysis covers the 2021 calendar year, bringing our previous analysis, more up to date. It is the first time we can see payments of Digital Services Tax within this sector, which we separately analysed here.
All companies covered in the report were approached for comment, and those who responded emphasised that they complied with all their tax responsibilities in the jurisdictions in which they operate.
The full report can be found here.