The world’s biggest tech companies, the Silicon Six, have paid nearly $278 billion less in taxes over the past decade than they would have if they had exploited tax loopholes, according to a new report from the Fair Tax Foundation (FTF), a UK-based non-profit that has revived the issue of tax fairness in the digital age.
Image source: AI
An FTF analysis found that the Silicon Six, which includes Amazon, Apple, Alphabet, Meta✴, Microsoft, and Netflix, earned $11 trillion in revenue and $2.5 trillion in profits over 10 years. However, as TechSpot writes, their average effective tax rate was just 18.8%, which is significantly lower than the U.S. average (29.7%) and the world average (27%).
If you exclude one-time payments related to profit repatriation, the effective (actually paid) tax rate was even lower, at 16.1%. In addition, companies overstated their tax payments by $82 billion by reporting so-called tax reserves—amounts set aside for possible future payments that will likely never be made.
Image source: techspot.com
According to Paul Monaghan, head of the Fair Tax Foundation, tax avoidance has become an integral part of the business models of large corporations. “Tax optimization, which is essentially legal ways to minimize tax liabilities, is built into their strategies,” he said. In addition, the report shows that tech giants are actively using low-tax jurisdictions and the US FDII (Foreign-Derived Intangible Income) tax incentive. The FDII mechanism allows companies to pay only 13.125% tax on the portion of foreign profits related to intellectual property, which is significantly lower than the standard corporate tax rate.
In 2024 alone, FDII saved the “six” $12 billion, and $30 billion over three years. For Meta✴, Alphabet and Netflix, this benefit reduced the tax burden by five percentage points. Among the companies with the lowest level of tax deductions were Netflix (14.7%), Meta✴ (15.4%) and Apple (18.4%). FTF considers Amazon to be the worst in terms of tax behavior, despite the fact that its average rate is 19.6%. At the same time, Microsoft became the leader in paying taxes with a rate of 20.4%.
Image source: techspot.com
The FTF also draws attention to the gap between actual tax payments and what is reflected in the accounting reports. Over 10 years, the difference between declared and actual taxes paid has reached $277.8 billion, while the volume of “uncertain tax positions” – that is, disputed claims for tax deductions – has more than tripled to $82.5 billion.
The companies responded to the criticism by stating that they comply with all local laws. Amazon representatives emphasized that the low tax rate is due to large investments and small profit margins. In turn, Meta✴ and Netflix said that they strictly follow tax rules in each country where they operate.