Over 36 billion in unpaid taxes thanks to the ability to ‘juggle’ one’s taxation and move it to where the rules are less burdensome. This is what the 25 major WebSoft companies have managed to do, the technological giants that operate from the Internet to software, explored in the usual Mediobanca report on the sector.
The study shows that in 2021 around 30% of the pre-tax profit of the world‘s 25 largest Websofts was taxed in low-tax countries, resulting in tax savings of 12.4 billion euros. Savings that rise to 36.3 billion in the three-year period 2019-2021. According to the survey, the average rate is 15.4% in 2021, lower than the theoretical rate of 21.9%. In the period 2019-2021, taxation in countries with subsidized taxation resulted in tax savings of 13.4, 6.9 and 5.2 billion respectively for Tencent, Microsoft and Alphabet, so to speak.
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In Italy in 2021 the branches of the Websoft giants paid the tax authorities almost 150 million for an effective tax rate of 25.1%. However, this figure refers only to Websoft with a branch in Italy, while it does not include foreign groups operating in Italy through branches and which may have paid taxes in other countries. Again according to Mediobanca, also considering the provision for the payment of the digital service tax, the tax rate would rise to 33.5%. In 2021, Amazon, which is present in Italy with 10 companies, paid 35.5 million euros with a tax rate of 32.9% while IBM paid the tax authorities 44.5 million with a tax rate of 19.5% . Microsoft follows with 22.6 million and a share of 32.8%.
The other numbers investigated by Mediobanca concern turnover. Taking the aggregate data of the 25 global giants, those that exceed 12 billion euros in revenues, we arrive at 1,584 billion euros, equal to 90% of the Italian GDP. In a long-established framework of forces, the United States (where 11 of the websoft giants are based) and China (9) shared almost all of the revenues: 67% of the Websoft turnover was generated by the US giants, 28% % from Chinese ones and only 5% from groups based in other countries, namely Germany (2), Japan (2) and South Korea (1).
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In terms of trends, the pandemic has further highlighted the growth speed gap between Websoft and multinational manufacturing companies: while the former accelerated revenues (+50% for 2019-2021), the latter only recorded a +7.6 %. Turnover is increasingly concentrated: the top three players – Amazon, Alphabet and Microsoft – account for half of aggregate revenues, with the e-commerce giant (414.8 billion euros, of which 50.9 % generated by retail), in first position since 2014, which alone concentrates over a quarter. At the end of 2021, the Websoft workforce numbered almost four million people worldwide, an increase of over one million units on 2019, of which 810 thousand from Amazon alone, the undisputed queen in terms of number of employees: 1.6 million at the end 2021.
This unstoppable growth trend showed signs of slowing down in the nine months of 2022, with an aggregate turnover growth of ‘only’ +9.5% year on year. The return to normality is reflected in the rebound of the sectors most penalized by the pandemic: sharing mobility (+111.6% of revenues over the year) and online travel sales (+55.5%). The increases for those sectors that had benefited from the changes in consumer habits were more contained: food delivery (+27.0%), cloud (+21.3%) and e-commerce (+3.8%). The sectors with the greatest impact on turnover are e-commerce (37%), advertising (25%) and the cloud (19%). In the same period, operating profitability contracted (-5.5% the mon on the first nine months of 2021) and net profits collapsed (-42%), with each company producing an average daily net profit of 16 million euro compared to 27 million in 2021. Liquidity was also down (-11.9%) which still remains strong, with an incidence on total assets of 23.4% at the end of September 2022 (from 28.0% at the end of December 2021, higher than 14.4% of large manufacturing).
The Stock Exchanges have taken note of this slowdown: after reaching their capitalization peak in December 2021 at 8,628 billion euros, in 2022 the Websoft giants recorded their first significant decline with a collapse of -29.2% as at 18 November 2022 .