Social media giant Facebook has seen its Italian headquarters raided by police as part of a growing international crackdown on tax avoidance.
The investigation comes just weeks after Google faced similar action. In that case the internet group was suspected of having failed to declare millions of euros in income.
Google denies any wrongdoing, stating that it “complies with tax law in every country in which it operates and we are confident we comply with Italian law”.
The investigation into Facebook came as it emerged Starbucks deal to voluntarily pay more tax in the UK could see its global tax payments reduce.
This week Starbucks agreed to pay an £20m over two years in UK tax. However, leading tax experts at Tolley have calculated that increased tax payable could result in a corresponding decrease in tax payable in other jurisdictions.
In some scenarios that decreased tax liability could be greater than the sum Starbucks has agreed to pay in the UK.
The most likely losers in the global tax game are Netherlands, Switzerland or the US.
Ben Saunders, Tolley tax business manager, said: “Effectively, this could mean that on account of disallowing costs in the UK, there is a corresponding reduction of profits in the Netherlands and Switzerland.
This is provided that the Dutch and Swiss authorities accept these amendments.”
On Thursday Starbucks announced it was to pay tax in the United Kingdom “above what is currently required by tax law”.
The international coffee chain said over the next two years it would not claim tax deductions for royalties and intercompany charges paid to over companies in the group.
The company said it would take the action “regardless of whether the company is profitable during these years”.
However, in accounting terms the action would result in profits that would have been booked elsewhere being made in the UK.
Hence any tax paid in the UK will be tax saved in other jurisdictions. Mr Saunders said: “If corresponding adjustments are made in the overseas companies, then Starbucks will not be increasing their tax base.
They would basically be opting to have profits taxed in the UK rather than elsewhere. And depending on the rates they are taxed at, the overall tax rate of the group could even decrease.”
A spokesman for Starbucks said: “The action we announced in the UK is isolated to our UK business and is not expected to have an impact on any of our affiliated businesses in other countries.”
A spokeman for Facebook said: “Facebook pays taxes in Italy as part of its activity in the country and takes its obligations in terms of Italian tax law very seriously,” the company said in a statement.
telegraph.co.uk
The investigation comes just weeks after Google faced similar action. In that case the internet group was suspected of having failed to declare millions of euros in income.
Google denies any wrongdoing, stating that it “complies with tax law in every country in which it operates and we are confident we comply with Italian law”.
The investigation into Facebook came as it emerged Starbucks deal to voluntarily pay more tax in the UK could see its global tax payments reduce.
This week Starbucks agreed to pay an £20m over two years in UK tax. However, leading tax experts at Tolley have calculated that increased tax payable could result in a corresponding decrease in tax payable in other jurisdictions.
In some scenarios that decreased tax liability could be greater than the sum Starbucks has agreed to pay in the UK.
The most likely losers in the global tax game are Netherlands, Switzerland or the US.
Ben Saunders, Tolley tax business manager, said: “Effectively, this could mean that on account of disallowing costs in the UK, there is a corresponding reduction of profits in the Netherlands and Switzerland.
This is provided that the Dutch and Swiss authorities accept these amendments.”
On Thursday Starbucks announced it was to pay tax in the United Kingdom “above what is currently required by tax law”.
The international coffee chain said over the next two years it would not claim tax deductions for royalties and intercompany charges paid to over companies in the group.
The company said it would take the action “regardless of whether the company is profitable during these years”.
However, in accounting terms the action would result in profits that would have been booked elsewhere being made in the UK.
Hence any tax paid in the UK will be tax saved in other jurisdictions. Mr Saunders said: “If corresponding adjustments are made in the overseas companies, then Starbucks will not be increasing their tax base.
They would basically be opting to have profits taxed in the UK rather than elsewhere. And depending on the rates they are taxed at, the overall tax rate of the group could even decrease.”
A spokesman for Starbucks said: “The action we announced in the UK is isolated to our UK business and is not expected to have an impact on any of our affiliated businesses in other countries.”
A spokeman for Facebook said: “Facebook pays taxes in Italy as part of its activity in the country and takes its obligations in terms of Italian tax law very seriously,” the company said in a statement.
telegraph.co.uk
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