According to Bloomberg Economics, Facebook and Amazon paid 12.2% and 11.8% in taxes respectively in 2020, which was below the 17.4% median tax rate that the world’s top 50 firms paid last year. Nvidia Corp paid just 1.7% in effective taxes, admitting that this was mainly due to income earned in low-tax jurisdictions like Hong Kong, Israel and the British Virgin Islands. The lowest tax rate was paid by California-based Trimble Inc at just 1.1%.
Even by the charmed standards of the technology sector, the recent Covid-19 pandemic has been akin to ascending to the seventh heaven. While the rest of the global economy languished from global lockdown, Big Tech prospered as life migrated online. Already roaring before the pandemic, tech stocks reached their crescendo during the pandemic as the S&P 500 IT sector gained 43.89% on the year — the most of any sector.
Unfortunately, this success has provoked the scrutiny of governments worldwide, with states fearing the implications of Big Tech growing too big for its boots. Already, governments from Washington to Beijing have asked questions of Big Tech’s market dominance and raised concerns about its commitment to protecting user privacy and combatting fake news. Now, with BEPS 2.0 aimed squarely at the sector, many are asking questions about its tax liability too.
