Tax avoidance doesn’t equal tax evasion. Although both practices are aimed at paying less taxes and duties, indeed, the former is not punishable while the latter, when referred to an unpaid, or hidden amount over 30 thousand Euros, is actually a crime. Basically, tax avoidance brings about relevant fiscal, and thus financial, advantages to those who practice it in a lawful, although borderline, way, and it is not prosecuted. In some cases, however, it represents a macro and unfair subtraction of what due to the State, to the community, in other words, to all of us tax payers who pay down to the very last penny. A huge injustice, actually, worth at least46 billion Euros.
This is the amount which, according to the latest report issued by Mediobanca, WebSofts, i.e. mega digital and high-tech companies such as Google, Microsoft, Amazon and Facebook, avoided paying to several countries in the world from 2013to the first quarter of 2018.
Altogether, we are talking about 21 business groups with a global turnover of over 3 trillion Euros (i.e. 1% of the global aggregated turnover). Thirteen of such groups are based in the US, five in China, two in Japan and one in Germany, and they deal with internet retailing and services (social network, browsers, web portals), and software development. And to these, we shall also add Apple which, despite not being a websoft but a big industrial tech company, generates most of the turnover from the hardware sector, taking the tax avoidance total up to 69 billion Euros.
In order of turnover, we can list Amazon,Alphabet, Microsoft, Jd.com, Facebook, Oracle, Alibaba, Tencent, Sap, Paypal, Baidu, Booking, Automatic Data Processig, Netflix, Vipshop, Salesforce, Qurate Retail, Expedia, eBay, Nintendo and Rakuten.
The trick used by these great “tax avoiders” to avoid paying taxes consists in locating their headquarters in the so called tax havens, where taxation on bank accounts is really low or inexistent, by creating, at the same time, a complex circuit of accounts among their holding companies and the controlled enterprises located in different places (Maxi tax avoidance by the internet giants: 69 billions in 5 years).
Thus, many WebSofts are headquartered in Ireland, Holland and the Luxembourg, or, like Alibaba and Tencent, directly at the Cayman islands. And then, we have companies like Facebook which paid a tax rate of 1% for the activities carried out outside the Usa!
In 2017, two thirds of the pre-tax profit of the “21 Sisters” was taxed in countries featuring a low tax system. Which translated into savings for 12,1billion Euros, thanks to an actual tax rate of 31%, against the foreseen 41% (Two thirds of Websofts international profits are recorded in countries with low tax systems ).
The IRS, however, is taking action basically everywhere, now. And while in theUnited States, following a 2017 amendment, WebSofts have been forced to pay 18 billions of dollars in extra taxes, in Italy, after a thorough inspection, a few days ago Facebook was obliged to sign an agreement with the local Tax Authorities, and will be expected to pay 100 million Euros. Before the social network, other agreements were also signed for a total worth of 700 millions byGoogle, Amazon and Apple (Revenute Agency: Facebook signs a 100 million Euros agreement).
Is it enough? Definitely not. It is about time the web and high-tech big names stopped avoiding paying taxes and a fair system was established in such a competitive market in which all players must comply with the same rules and pay the same taxes and duties.
And then let’s wonder: why are WebSofts managers always designated to institutional roles or appointed as board members of other big companies?
What about a possible web tax obliging the high-tech giants to pay what’s due in the countries they operate in? Right or wrong? Tweet @agostinellialdo
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