🚨 At the @G7 in London today, my finance counterparts and I have come to a historic agreement on global tax reform requiring the largest multinational tech giants to pay their fair share of tax in the UK.
First, Amazon is not subject to the first part of the deal: its margins are way below 10%. So don't think this is a solution for all tax problems from multinational corporations, because it is not.
Second, there are other companies in scope who might be surprised. For example, Astra Zeneca had a ten per cent margin in 2020, not 2019, so there are real issues here. Defining just what the margin is within a company, and whether one year alone is going to be enough to trigger the charge is going to be a big negotiating point. I can see costs previously dumped in the statement of comprehensive income or movements in equity suddenly creeping back into the income statement to avoid this change if we are not careful.
Third, just what tax paid is will also be an issue. For example, in 2021 Tesco plc had a current tax paid figure in its income statement of £178 million, but credits elsewhere in the accounts of £188 million, meaning it actually had a current tax credit of £10 million. So what is tax paid in that case? This is going to be a thorny issue. And let's also be clear, this must also relate to current d=tax and deferred tax cannot be taken into account.