Facebook, Microsoft and Alphabet avoiding an estimated $4.2 billion in tax, new report says

Global activism group ActionAid is calling for global cooperation to tax technology giants fairly after a new report suggested they could be avoiding billions in taxes.

Your playlist will load after this ad

David Archer of ActionAid talks about how companies like Alphabet, Facebook and Microsoft avoid paying tax. Source: Breakfast

The group produced a report, available here, on how much tax Alphabet, Facebook and Microsoft could be avoiding in developing countries, saying they could collectively be avoiding up to NZ$4.2 billion by cleverly choosing which countries to declare income in.

"Little is known about how much tax these companies are currently paying in developing countries, as they are still not required to publicly disclose this information," the report says.

"This research shows, however, that billions could be at stake in the long overdue reform of international corporate taxation – enough to transform underfunded health and education systems in some of the world’s poorest countries."

David Archer, ActionAid's head of tax justice, told TVNZ1's Breakfast this morning that getting to the bottom of the issue will require international cooperation.

"It's challenging in any company to get these big companies to be paying their tax - it's acute in the case of some poorer companies," Archer said.

"Just these three companies could address over 40 per cent of what the World Health Organization says are the shortages of health workers, of nurses and midwives.

"That could transform the capacities of these countries to respond to Covid, and to achieve wider development goals."

Archer said the basic idea of avoiding tax is that companies use "tax havens" - countries where the business tax is lower - to declare the bulk of their income there, while at the same time declaring the costs of running their businesses in areas where taxation is higher.

Those who turn a blind eye to these practices are "contributing to the perpetuation of poverty and under-development around the world", he said.

"This has been given as a task to OECD - the club of rich nations. You've got 130 nations which have got some level of involvement, but there's not really a significant voice for some of the largest and poorest countries of the world in setting these rules," Archer said.

"There ought to be a UN body which is a representative democratic space for setting and enforcing global tax rules."