Little Room for Manoeuvre for Osborne in Crackdown on UK Tax Loopholes for Tech Giants

Osborne
Britain's Chancellor of the Exchequer George Osborne speaks to members of the Armed Forces at 11 Downing Street, in central London December 2, 2014. Anthony Devlin/Pool/Reuters

George Osborne announced his plans to crackdown on the tax loopholes which are currently being exploited by tech giants in the UK on Wednesday.

As part of his Autumn Statement, the chancellor of the exchequer insisted he would target the multinational technology companies who are currently able to avoid paying huge amounts of corporation tax by claiming that their activities that produce profit are not undertaken in the UK.

In 2013 Amazon paid just £4.2 million tax, despite selling £4.3 billion worth of goods in the UK while Facebook paid zero corporation tax both in 2012 and in 2013, due in part to the fact the company channels its UK sales through its Ireland subsidiary where corporation tax rates are lower.

Osborne's move is a designed to appease voters who are becoming frustrated about the ability for these large companies to avoid taxes so easily.

A Christian Aid and Action Aid poll, published last month, revealed that while 85% people believe it's morally wrong for large companies to avoid tax, just one in five think that political parties have done enough to combat the issue.

However there are doubts as to whether Osborne will be able to implement policies in order to shut down these loopholes. "It's nigh on impossible," Richard Murphy of the Tax Justice Network told Newsweek. "The Organisation for Economic Co-operation and Development (OECD) has yet to set out plans to combat the problem of corporate tax avoidance and the UK can't do anything without international measures - we can't act alone."

"Osborne can't change the VAT rate on specific companies or sectors either because of EU law, so he can't go that route. EU law makes it very hard to make any changes at all."

"The OECD has not yet said what it plans to do so I only guess Osborne will announce a consultation at best and if I were in the PR department for these tech businesses I would say 'We welcome these consultations', and then not another word. This is hype without substance. Osborne's room for manoeuvre is absolutely minuscule."

According to research done by the Financial Times, in 2012 seven US technology giants paid just £54m in UK corporate tax.

Little Room for Manoeuvre for Osborne in Crackdown on UK Tax Loopholes for Tech Giants | Business