Developing countries may be missing out on $2.8bn tax revenue from big tech cos: study

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Developing countries may be missing out on billions in tax revenue from big tech companies, according to a study by anti-poverty global federation ActionAid International.The recently published study claims that 20 developing countries could be missing out on as much as $2.8 billion in tax revenue from three major technology companies- Facebook, Google parent Alphabet Inc. and Microsoft due to “unfair global tax rules.”“ActionAid’s new research analyses Facebook, Alphabet and Microsoft and the potential tax revenue that their market activity could generate if the tax regime and resulting corporation tax bills better reflected these companies’ economic presence,” ActionAid said in an official release.The potential $2.8 bn ‘tax gap’ suggested by the study is calculated based on the global profits of these companies and their economic activity which is based on the number of users in these countries.The “calculation is based on the share of the three tech giants’ global profits, relative to their number of users and adjusted for countries’ GDP per capita, which accounts for users’ relative values across the 20 countries studied,” it said. The “highest tax gaps” observed were in India, Indonesia, Brazil, Nigeria and Bangladesh, as per the report. David Archer, the global taxation spokesperson for ActionAid International, said, “The $2.8 billion tax gap is just the tip of the iceberg – this research covers only three tech giants. But alone, the money that Facebook, Alphabet and Microsoft would be paying under fairer tax rules could transform public services for millions of people”. The report further added that the tax gap could be used to address the public needs of these countries, especially during the Covid-19 pandemic. The $2.8 billion could pay for “729,010 nurses, 770,649 midwives or 879,899 primary school teachers each year in 20 countries across Africa, Asia and South America,” it said. The calculations for the number of public services workers were based on data from the Wage Indicator Foundation’s public sector worker database.

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