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Amazon, Google and Apple won't need to pay tax, despite government threats

17 May 2013
V3's Madeline Bennett

It’s been a busy week for technology companies explaining their tax situations.

The week started off with news that a £150m rural mobile contract had been awarded to Arqiva, the firm that in January came under the spotlight for alleged dodgy tax practices. On Tuesday, news broke of another government contract for Arqiva in the form of providing the infrastructure to support the rollout of free WiFi across Camden. And Wednesday brought the third government deal in as many days for Arqiva, with news that it had also won the contract to provide free WiFi across Hammersmith and Fulham.

By Thursday, attention had shifted to some larger names in the tech industry. The day began with complaints over Amazon only paying £2.4m tax in the UK last year. This was despite making sales of £4.3bn and receiving £2.5m in government grants, so effectively Amazon cost the country £100,000 over 2012.

On the same day, Google was back in the tax-dodging spotlight. Margaret Hodge, chair of the Public Accounts Committee (PAC), said that the web giant was devious, calculated and unethical for misleading parliament over its tax affairs six months ago, adding that Google certainly does "do evil" when it comes to paying taxes.

Google has previously stated that its UK sales were worth £3.2bn in 2012, from which it paid a less-than-whopping £3.4m in tax.

A busy Thursday was rounded out by Apple throwing its hat into the ring on tax affairs across the pond. Chief executive Tim Cook revealed he would visit Washington to testify about stashing more than $100bn overseas.

And to wrap up the week, it looks like Amazon will be called back to parliament to go over its tax processes again.

The firms all have their reasons for why they have paid such low levels of tax.

When I questioned Arqiva on whether it’s fair that a firm contributing little in the way of taxes should win three government contracts in a week, Nicolas Ott, the firm’s managing director for government, mobile and enterprise pointed out that the firm has invested nearly £1bn in the UK's communications infrastructure.

“The Mobile Infrastructure Project awarded by DCMS will provide mobile signals to rural areas where there is no coverage today. Our WiFi business is also growing rapidly and the contracts to deliver WiFi to various London Boroughs will help millions more people be connected," Ott said. “We will continue to bid for new infrastructure and communications projects where we believe we can offer the best possible service to the public and support a thriving digital economy in the UK.”

So the basic argument here seems to be that the firm spends money on useful projects for the country, like digital access, so why should it have to then pay as much tax as other firms who do less useful things, such as betting shops or hairdressers.

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Madeline Bennett

Madeline Bennett is editor of V3 and The INQUIRER. Previously, she was editor of IT Week. Prior to becoming a journalist, Madeline was an English teacher at a London secondary school. Madeline is a regular technology commentator on TV and radio, including Sky, BBC and CNN. 

View Madeline's Google+ profile

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