The issue of multi-nationals paying their fair share of tax has been much in the news lately, particularly in the light of “sweetheart” deals conducted in Luxembourg which apparently saw very light taxation applied when monies earned elsewhere in Europe flowed through the Grand Duchy. Whilst it is unlikely that what was done was actually illegal, it was surely immoral and deprived exchequers in other jurisdictions of a proper share of taxes on profits made in their territories.
Tax evasion is a criminal offence; tax avoidance is an accounting skill designed to reduce the contributions that a corporation makes by taxing full advantage of legislation to off-set tax on profits against “legitimate” expenses. So, if people are angry about abuses of large corporations, the power to change things lies with their elected representatives.
The latest corporation tax scandal to break centres on the social media giant, Facebook. The company paid a paltry £4327 contribution for its tax on corporate profits in the UK in 2014 – this is less than the sum an average citizen pays on the tax on their earned income and national insurance: £5392.8. Tax avoidance skills allowed the company to claim that it made a pre-tax operating loss in the UK of £28.5 million whilst it rewarded its 362 UK staff shares worth £35.4 million working out as an average of £96000 per head. Were a small business in the UK to rack up anything like that level of debt, it would cease trading and be forced into bankruptcy, but these rules do not apply to multinationals.
Any suggestion that Facebook has fallen on hard times is dispelled by the knowledge that global profits came in at $2.9 billion in 2014, nearly doubling in a year. Advertising revenue (not profit) was up by 53% to almost $3.6 billion – the site boasts 1.39 billion users globally.
Much was made in the news recently of an “unlike” button that customers could use. One imagines that a Facebook page dedicated to corporate responsibility and paying one’s way in the world would generate its fair share of “unlikes” pretty quickly. 
According to an OECD/G20 report, sweetheart deals with big corporations cost between 4 and 10% of (legitimate) global corporation tax revenues per annum – between $100 billion to $240 billion is staying in corporate pockets rather than flowing back to the communities where the profits were made. Corporations must be able to flourish and make good profits for shareholders, but they must also have an obligation to pay their fair share of taxes to the communities that host them. The solution is firmly in the hands of legislators – nobody in their right mind wants to pay more tax than they must, but a system which allows a company to give staff £35.4 million in share bonuses whilst only contributing £4327 to the exchequer is clearly badly broken.