Apple Pays Just 2% UK Tax as Amazon and Google Face Questioning

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By Alistair Charlton | November 5, 2012 9:05 PM EST

Apple paid just 1.9 percent tax on profits made outside of the US last year, as fellow American companies Starbucks, Amazon and Google are hauled before the Commons public accounts committee to explain why they pay so little tax.

Using a much publicised technique of funneling UK earnings through Irish-based subsidiaries, Apple and other multinational US companies are able to legally avoid the UK's headline corporation tax rate of 24 percent.

According to its 10K filing with the US Securities and Exchange Commission (SEC), the Cupertino, California-based iPhone maker paid $713m (£445m) in overseas corporation tax on foreign profits of $36.87bn (£23bn) for the year ending in September.

The Apple figures were revealed as Google, Amazon and Starbucks are to explain why they pay so little tax to the Commons public accounts committee on 5 November; committee chairwoman Margaret Hodge said: "We want to ask them for an opportunity to explain why they don't pay proper levels of tax in the UK."

Hodge asked the PM during prime minister's questions last week why he had criticised comedian Jimmy Carr for avoiding £3.3m of tax, when companies such as Google and Starbucks are avoiding much more.

"Apple, Google, Facebook, eBay and Starbucks have avoided nearly £900m. Will the prime minister now take this opportunity to condemn their behaviour as morally wrong?" she asked.

Not happy

Cameron replied that he is "not happy with the current situation" of US companies avoiding paying millions of pounds of tax in the UK.

According to the Financial Times, in 2011 Google reported a tax charge of £3.5m and a UK turnover of £396m.

As with Apple and others, Google registers its UK arm as a service business and channels revenues earned in the UK through Ireland, where corporation tax is just 12.5 percent.

According to a Bloomberg investigation in 2010, Google's Ireland headquarters pays a royalty for the use of the company's search and advertising technologies, which results in earnings being shifted to Bermuda, via the Netherlands.

Google said in a statement: "We make a substantial contribution to the UK economy through local, payroll and corporate taxes. We also employ over 2,000 people, help hundreds of thousands of businesses to grow online and invest millions supporting new tech businesses in east London. We comply with all the tax rules in the UK."

IBTimes UK has contacted Apple for comment and is waiting for a reply. 

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