Tech giants must pay their fair share of tax to help tackle COVID

G20 countries may be losing as much as $32bn annually in taxes from just five of the world’s largest tech companies.

Amazon Workers Protest Against Jeff Bezos
An activist holding a sign demanding online retailer Amazon pay its share of taxes joins a protest gathering outside the Axel Springer building on April 24, 2018 in Berlin, Germany [Sean Gallup/Getty Images]

Leaders of the wealthiest countries will be attending the G7 Summit in Cornwall, UK, on June 11-13 in the first “in-person” world leaders’ summit since the pandemic started.

There are a number of complex global issues G7 leaders will wrangle with at the summit, namely, how to end the pandemic, kick-start the recovery and better prepare for climate change. Pressure is on the UK government which hosts not only the G7 but also the UN Climate Change Conference later this year.

The question on everyone’s mind is: Who will foot the bill to address these global issues?

New ActionAid research shows that G20 countries may be losing as much as $32bn annually in taxes from just five of the world’s largest tech companies. Just one year’s fair tax bill on tech giants Amazon, Apple, Facebook, Alphabet and Microsoft could have paid for full two-dose COVID-19 vaccination for every human on earth.

Of course, this figure merely offers a sense of the scale of resources involved in taxing big tech companies. In practice, it is by sharing knowledge and technology that the production of vaccines can be accelerated to reach as many people as possible.

One route is through a temporary waiver of patents on vaccines and other COVID-19 therapeutics and diagnostics, as championed by India and South Africa and more than 100 countries at the World Trade Organization. The Biden administration has recently backed the waiver of patents on vaccines, and we urge the UK government as G7 hosts to follow suit.

But ActionAid’s new report, Mission Recovery: How Big Tech’s Tax Bill could kick-start a fairer economy, offers viable ways for governments to increase tax revenue and finance vaccines, public services and a green recovery.

Tech giants like Amazon, Apple, Facebook, Alphabet and Microsoft have extensive market activity across the world and have racked up billions in profits during the pandemic. If global corporate tax systems were fair, governments could increase their tax revenue and fund better health systems to help end the pandemic and start the recovery.

With US Treasurer Janet Yellen’s comments on corporate tax recently, it’s a hopeful time for campaigners calling for a global minimum corporate tax that would impact the Silicon Valley tech giants, big polluters and many billionaires whose wealth has multiplied exponentially during the COVID-19 pandemic.

Another question that is on some people’s minds is: How should we determine the corporate tax big tech companies should pay in each country where they operate? There are many ways that this could be calculated, but most recommendations suggest looking at factors like their sales, assets and the number of employees they have in each country. In the absence of transparent reporting from companies, collecting such data is not easy, but we can get a useful estimate by looking at a proxy indicator: the number of users they have in each country. For example, in just 20 developing countries there are nearly 1.5 billion internet users accessing Google, about 900 million people using Microsoft and more than 750 million Facebook users. For these companies, the number of users is a good indicator of both their sales and their assets. For digital companies, user data is perhaps the most valuable commodity – something that is mined in multiple ways and can be sold onwards.

ActionAid is one of a number of organisations calling for meaningful reform of international corporate taxation that would ensure companies’ taxes reflect their real economic presence, and for introducing a minimum tax rate to help fight the problem of tax havens. First, we need to know what these companies are paying (or not paying) in all the countries where they are present. Some companies, like large banks in the EU, are already subject to “Public country-by-country reporting” which involves public disclosure by companies of key financial and tax data, broken down by the countries where they operate. This requirement should be extended to all large multinational companies. What is more, we want countries in the global south to have a meaningful say in setting global tax rules, which is why we support the calls for the creation of a UN Tax Commission that is empowered and resourced to set and enforce fair tax rules.

Everyday folk have been hit hardest by the pandemic: informal workers on precarious contracts, front-line health heroes and essential workers – the majority of whom are women. Hardworking taxpayers around the world are right to be furious, waking up to headlines every day about the wealthy getting wealthier as the world is hit by an unprecedented health and economic crisis. Wealth for the 1 percent increased by $3.9 trillion since the pandemic started, while the International Labour Organization found that global workers have lost earnings of $3.7 trillion in the same timeframe.

ActionAid’s new research shows that billions could be at stake in the long-overdue reform of international corporate taxation – enough to transform underfunded health and education systems across the globe. And in the absence of a global deal on tax, countries could take unilateral measures to tax these companies on their profits or their transactions.

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial stance.