Tax Haven Cash Dwarfs Tech Cos.' Virus Relief, Report Says

By Joseph Boris
Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.

Sign up for our Technology newsletter

You must correct or enter the following before you can sign up:

Select more newsletters to receive for free [+] Show less [-]

Thank You!

Law360 (April 9, 2020, 7:53 PM EDT) -- Eight of the world's biggest tech companies have donated money for novel coronavirus pandemic relief that equals just 22 cents for every dollar they stashed in offshore tax havens before the U.S. tax overhaul, an advocacy group charged Thursday.

The calculation is based on cash and in-kind donations totaling $1.2 billion as reported by the American tech giants — Apple, Google, Facebook, Cisco Systems, Adobe, Intel, Microsoft and Nvidia — to counter the impact of the pandemic, according to Tax Watch UK. The group describes itself as an investigative think tank that researches tax strategies used by companies and wealthy individuals.

Accounting for more than 50% of the aggregate donation is a package of more than $800 million that Google and its holding company, Alphabet Inc., announced March 27. This included $250 million in advertising grants to the World Health Organization and other public bodies, a $200 investment fund to back nongovernmental organizations and financial institutions, $340 million in Google Ads credits for small businesses' banking needs and $20 million in Google Cloud credits for academic institutions.

At the other end of the spectrum was Nvidia Corp.'s offer of 90 days of free genome-analysis software for scientists researching a vaccine for COVID-19, the respiratory disease caused by the coronavirus.

"These donations are peanuts compared to the amount of money these companies have squirreled away in tax havens over the years, depriving governments of tax revenues," the group's analysis said.

Tax Watch UK suggested that public health services around the world would be better served "if tech companies simply paid their taxes in normal times rather than relying on handouts in a crisis."

The data shows that tech companies have donated less than a quarter of 1% of the profits they accumulated in tax havens to the global coronavirus response, George Turner, Tax Watch UK director, said in a statement accompanying the analysis.

"Any donation is of course valuable and welcome, but these figures do highlight that health services around the world would be better served if tech companies simply paid their taxes in normal times," he said.

The data highlights the need for governments to continue efforts to overhaul the international tax system and ensure that tech companies can no longer avoid paying taxes in countries where their profits are made, according to Turner.

The analysis pointed out that many big tech players aren't experiencing the same harsh economic conditions faced by other industries during the pandemic as a result of rules limiting or banning public gatherings.

With stores forced to close, retailers that can move online have done so, to the benefit of internet ad behemoths Google and Facebook, Tax Watch UK said. A massive shift to people working from home helps Microsoft, while online marketplaces have realized huge increases in traffic, the analysis said, citing a March 16 announcement that will hire 100,000 extra workers in the U.S. to handle a surge in pandemic-driven demand.

Tax Watch UK said its review of U.S. companies' regulatory filings has shown that the profits they accumulated in tax havens were earned abroad. Before the Tax Cuts and Jobs Act was enacted in late 2017, the analysis noted, foreign earnings in cash could be transferred to the U.S. only at the standard federal corporate tax rate of 35%. The law cut that rate to 21%.

The group's analysis drew on a study — derived from U.S. regulatory filings — by the Institute on Taxation and Economic Policy that found that Microsoft, Apple, Alphabet, Facebook, Cisco Systems, Adobe, Intel and Nvidia held a total of $571 billion in offshore tax havens as of 2017.

Tax Watch UK said it had contacted all eight of the companies in its analysis but that they either didn't respond or declined to comment.

None of the companies could immediately comment to Law360, but representatives of Alphabet and Microsoft said they were looking into the matter.

Tax Watch UK didn't immediately respond to a request for comment about other tech industry-related responses to the pandemic, such as Tuesday's pledge from Twitter Inc. CEO Jack Dorsey to fund $1 billion in charitable causes, including coronavirus relief. According to Dorsey, the money will come from his shares in financial-tech provider Square Inc., which he also co-founded and runs.

--Editing by Neil Cohen.

For a reprint of this article, please contact

Hello! I'm Law360's automated support bot.

How can I help you today?

For example, you can type:
  • I forgot my password
  • I took a free trial but didn't get a verification email
  • How do I sign up for a newsletter?
Ask a question!