Apple's Low UK Corporation Tax Is Legal says Forbes

In 2010, the iPad maker paid only £10.3 million in corporation tax which raised questions among the UK authorities. Amazon is also facing enquiries on this matter.

Both companies have massive sales in the United Kingdom and the taxes paid do not reflect the revenue earned from British customers.

Apple is accused of avoiding paying higher taxes by using foreign subsidiaries, such as the British Virgin Islands and Ireland.

Amazon's situation is even trickier, as the retail giant was discovered to have over £8 billion sales in the UK in the past three years without paying any corporation tax.

However analysts have pointed out that Apple's policy is not illegal. According to a recent Forbes report, the truth is somewhere in a grey area, since Europe is not a single market.

A company that sells products in UK or any other European country doesn't need to have an office in that country and doesn't need to pay corporation tax.

The corporate tax, different from VAT, is to be paid in the country where the companies are set. This is why Amazon chose Luxembourg to set up and Apple decided on Ireland: countries with low corporate tax rates.

source: Forbes