Global corporations are under increasing scrutiny over how much corporation tax they pay, according to www.accountancyage.com with multinationals coming under fire for tax structures that allow them to legally trim their tax bill. This may occur through companies circumventing revenue through countries with lower corporation tax rates or through tax breaks for employees. In some cases, companies suffering losses in parts of their business may have their profits negated.
The EU has began planning action against such circumventions, and so far this has materialised in big names such as Amazon and Apple being demanded to pay back taxes to EU countries.
Here are some of the latest big names to hit the headlines over their corporate tax bill.
Airbnb pays £188,000 in corporation tax
Airbnb paid £188,000 corporation tax in the UK last year, despite generating £657m in rental payments for property owners. This was £8,000 less than tax paid in 2015.
The company has two UK subsidiaries, but commissions earned by the company are booked through its Irish subsidiary. While one of its UK subsidiaries made a pre-tax profit, the other did not pay corporation tax due to deductions that reduced profits.
Airbnb Payments UK, the British branch that deals with payments between landlords and customers for countries other than the US, China and India, made a pre-tax profit of £960,000 and paid £18,000 in UK corporation tax.
The other UK branch, Airbnb UK, which handles website and app marketing, earned £463,000 in pre-tax profits but did not pay corporation tax due to tax-deductible shares to staff that resulted in a loss.
In a statement Airbnb said: “We follow the rules and pay all the tax we owe.”
“Our UK office provides marketing services and pays all applicable taxes, including VAT. The Airbnb model is unique and boosted the UK economy by £3.46bn last year alone.”
Facebook pays £5.1m in corporation tax despite quadrupling revenue
Facebook paid £5.1m in corporation tax in the UK last year, despite profit and revenues skyrocketing.
Revenues quadrupled from £210m in 2015 to £842m last year, and pre-tax profits were recorded at £58m, up by around £6m. The social media giant paid £4.2m in corporation tax in 2015.
Facebook attributed the dramatic rise in revenue to the “commencement of advertising reseller services” by its UK services in April 2016, which brought in large numbers of UK customers, according to the Guardian.
The tech giant made the move following criticisms of its controversial tax practices that saw the company routing advertising sales through Ireland to pay a lower corporation tax rate.
At the time, the company said in a statement: “Last April, we actively chose to reorganise our company structure to record revenues from our large UK sales customers in the UK.”
“We believed this would provide greater transparency on our operations in London and be easier for people to understand. These accounts reflect that change.”
In 2014 Facebook paid the meagre sum of £4,327 in corporation tax in the UK.
In 2016 the social media giant was also able to reduce its overall corporate tax bill by £6m through legal tax breaks relating to employee share awards.
Kellogg’s pays £0 corporation tax despite £40m profits
Kellogg’s paid no corporation tax in the UK last year, despite its subsidiaries Kellogg Company of Great Britain and Kellogg Marketing and Sales making a combined profit of £40m.
The cereal giant’s corporation tax bill was cut due to losses in other parts of the company, according to the Mirror.
The Mirror quoted Kellogg’s UK and Ireland branch stating: “We pay all corporate tax according to the laws of the countries in which we operate.”
The paper noted Kellogg’s made sales worth £900m last year.
eBay pays £1.6m corporation tax
eBay paid £1.6m corporation tax in the UK last year despite increased revenue. The California-based tech giant’s UK accounts revealed an 8% increase in revenue in the past year, to £200m, but it paid less tax as profits dropped to £7.6m.
However, the multinational revealed to shareholders in its 2016 US annual report that UK revenue in the last year were $1.3bn. This disparity relates to the UK accounts omitting sales commissions eBay receives, which are reportedly routed to the company’s Swiss subsidiary, eBay International AG, apparently for providing marketing and advertising services.
eBay was quoted in the FT as saying: “In all countries and at all times, eBay is fully compliant with national, EU and international tax rules including those of the OECD, including the remittance of VAT to the appropriate authorities.”
The online marketplace website, along with Amazon, garnered criticism earlier this year for evading VAT through overseas sellers illegally selling products in the UK without paying VAT.
Source: Accountancy Age www.accountancyage.com