How Apple, Google are saving billions in taxes

European leaders recently met to discuss tax policy and specifically their concerns over how a number of high-profile international companies have managed to pay next to no tax on their vast sales revenue generated in Europe. 

Here are some of the IT majors caught in the tax row. 

Apple
A recent investigation by the US Senate shows that the maker of iPads and iPhones had paid just 2 per cent tax on income of $74 billion over the past three years, largely by exploiting an unusual loophole in Ireland's tax code. 

Ireland has said it is not to blame, and Apple has defended its practices, which are legal. But the Senate report has added to the furore surrounding tax avoidance by major companies. 

Google
Despite generating $18 billion of revenue in Britain from 2006 to 2011, the internet search giant paid only $16 million in taxes to British authorities. Google says it does not have a sales presence in Britain and therefore cannot be considered resident for tax purposes, lowering its obligations. 

An investigation by Reuters has shown that some of the 1,300 people employed by Google UK Ltd are engaged in sales-type work or have titles that suggest involvement in sales and marketing activities, but Google says it hires people with a sales background even if they are not directly involved in selling. 

The British parliament has called Google executives before a hearing to try to understand more about its activities. 

Amazon
The internet retail company runs the bulk of its European operations out of Luxembourg, allowing it to minimize the amount of tax it has to be pay on revenue generated in other European countries. 

But the tax avoidance mechanism has also allowed Amazon to dramatically cut its US tax bill, an investigation by Reuters has shown, with the company paying a tax rate of around 5.3 percent over the past 5 years. The US tax authorities have asked Amazon to pay back taxes totaling $1.5 billion, a demand that the company has said it will "vigorously contest". 

Vodafone
The world's largest mobile phone operator has managed to gradually reduce the amount of tax it pays in Britain over the past decade by using legal tax avoidance schemes, including registering profit in other jurisdictions, such as Luxembourg. 

A Reuters examination of statutory filings by Vodafone across Europe over the past 16 years shows that the British taxman has frequently gone empty handed, losing out on perhaps has much as 1 billion pounds ($1.51 billion) in revenue.