Why do such big corporations like Google, Amazon, Facebook, EBay, or Starbuck pay so low taxes in the UK?These multinational American companies with big sales seem to practice tax avoidance in our country. As in many other countries, in the United Kingdom, there is imposed a requirement on each company to pay corporation tax connected with profits made by a company. This tax rate is 20% of profits. In this place, there should be added that “sales” and “profits” are not the same. Your gained profits are total sales minus incurred costs.Do all these hugecorporations’ systems are created to avoid tax payment? We should also explain two different terms: “tax avoidance” and “tax evasion”. Up to now, probably some of you probably had though that these actions are the same, but of course, they are not. The main difference between “tax avoidance” and “tax evasion” is their legalities.
The first term is absolutely legal i.e., companies take a use of various tax loopholes in the law, and therefore they reduce the amount they have to pay, or pay nothing whatsoever. “Tax evasion” is illegal action which involves deliberate hiding incomes and thereby escaping from tax payment. As far as aforementioned corporations are concerned, they are connected with the first option, in other words, thanks to high-qualified lawyers and experts whose goal is to find all tax loopholes in our law, they can legally low their tax bills. Now, you are wondering how it is possible. First of all, as it has been an already mentioned, in the UK pay taxes on their profit, not on sale. If any company sells or buys some products overseas, then the cost incurred in result of such “process” could reduce the profit. Reduced profits, means reduced taxes, but in reality, most this money remains within a company. Although it is legal action it is unfair to other local British companieswhich do not trade oversea. Why is to so negative? It means that big American businesses contribute much less to our economy than local entrepreneurs. They make in our country horrendous money, and give a little in return.
Additionally, money received from taxes is paid for public facilities, for instance, roads, education, health service or the police. By tax avoidance, not only is our government deprived of money but also our society. Because of this reason, all big corporations should pay even higher taxes that British companies do, as their profits and sales in the first place, are incomparable to ours. Nevertheless, it could be changed by the development of a new tax system, but this is a task for the government. We as a one of the crowd, can show our disapproval of such action by organize consumer boycott. Firstly, we do not have to buy everyday coffee from Starbucks. There so many little cafes which need our financial support. Secondly, we can do shopping in real stores not by the Internet. Boycotting Facebook or Google is the most difficult. But they are more special companies, and advantages that we take from using it are hard to be replaced.