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Tax Evasion : How Zoom paid $0 in 2020 despite record breaking profits.

FY20 was exceptionally profitable for the video calling app. Profits soared more than 4000% but zoom somehow managed to pay $0 in taxes.


Zoom joins the tax evasion club of the corporate giants like  Amazon, Facebook, Microsoft, Apple, and Netflix with its spectacular debut of $300 million tax avoidance in 2020 using stock-based compensation.

Companies that pay their executives with stock options will deduct massive costs that far outweigh their actual costs for tax purposes.

However, research and development credits compensated for just 1% of Zoom’s tax benefits, with the remaining 99 percent coming from awarding executives $302.4 million in stock-based compensation, up from $32.1 million the year before.

The business recorded $660 million in pre-tax profits in 2020, a massive improvement from $16 million in pre-tax profits in 2019. The company’s unparalleled revenue growth can be attributed to the rapid transition to online activity. Zoom has become a regular meeting place for many people, whether for work, class teaching, family events, or night happy hours.

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A-Zoom spokesperson told Insider in a statement the company “complies with all applicable tax laws” in countries where it does business and that it “has invested heavily in research and development activities to build and enhance its communications technology – development activity that is specifically encouraged under current law.”

Last year, Zoom paid a total of $5.7 million in taxes, resulting in an effective tax rate of 0.8 percent. However, $3.9 million of that was charged on the company’s $14.1 million in international earnings, resulting in an effective rate of about 28%, exposing significant inconsistencies in the US tax framework.

“If you paid $14.99 a month for a Zoom Pro membership, you paid more to Zoom than it paid in federal income taxes even as it made $660 million in profits last year – a 4,000 percent increase since 2019. Yes. It’s time to end a rigged tax code that benefits the wealthy & powerful,” Sen. Bernie Sanders tweeted on Sunday.


Accelerated depreciation and research and development tax credits seem to have benefited the organization financially. Notably, Amazon and Netflix tend to have used a mix of three tax breaks to successfully reduce their federal tax bills during the Trump corporate tax utopia so far.

Zoom’s corporate tax dodging has resulted in a quick revenue bonanza: the firm had $4.2 billion in cash and equivalents at the end of the fourth quarter of 2020 and they have no idea how to spend this mountain of cash.

“if any of you have any great advice on how to do that”, said CEO and CFO of Zoom when asked how the company planned to spend the money.

President Joe Biden and congressional leaders signal their plan to take further action regarding corporate tax reform.


Also read :

5 Sources of states’ own tax revenue (% share)

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