Treasury Committee member John Mann expects Google to be called in over ‘tax avoidance’
A petition launched by the campaign group 38 Degrees, calling on Google to pay its ‘fair share of tax’, has attracted 47,000 signatures in its first week.
The petition tells Google: ‘There’s nothing responsible about only paying £6m in UK tax on hundreds of millions of pounds of revenue. Please do the right thing.’
The Daily Telegraph reported that ‘anger over the amount of tax paid by Google in the UK could escalate after documents showed the web giant contributed just £6m to the exchequer in 2011 on UK turnover of £395m’. The news story published on 8 August initially reported that turnover was £3.95bn – citing, according to a footnote, figures from Google that ‘misplaced a decimal point’. The amended story reported that the UK business reported a loss after tax of £24.1m.
38 Degress said its petition was published ‘using mistaken information from The Telegraph’. The error had been corrected, but ‘finding out exactly how much tax Google would pay if it weren't tax-dodging isn't straightforward’.
A Google spokesperson said: ‘We make a substantial contribution to the UK economy through local, payroll and corporate taxes. We also employ over a thousand people, help hundreds of thousands of businesses to grow online and invest millions supporting new tech businesses in East London. We comply with all the tax rules in the UK.’
The company had nothing further to add today in response to a report in The Independent indicating that Google chiefs faced ‘the prospect of being hauled before MPs to explain themselves over their tax avoidance schemes’, and reports in The Independent and the Daily Telegraph suggesting that Google pays much of the money it makes to the tax haven of Bermuda.
The paper reported that Labour MP John Mann, a member of the Treasury Select Committee, said ‘he had discussed the idea of looking at tax avoidance with his colleagues and expected Google in particular to be called in’.
Bermuda
‘Anger is growing over the revelations that a complex series of transactions sees Google move most of the money it makes into the tax haven Bermuda, paying a minimal sum in the UK,’ The Independent reported at the weekend.
‘Figures emerged last week showing that, while it paid more than it did in 2010, Google contributed £6m to the Exchequer in UK taxes last year,’ it said. ‘The company operates a scheme under which its Irish subsidiary employs Google UK as an agent, meaning the proceeds of sales made in the UK end up in Ireland. A commission of around 10% is then paid back to Google UK. That fee is taxable once costs have been deducted. Google Ireland then pays much of the money it makes to the internet giant’s Bermudan firm as a licensing fee, ensuring that a large portion of its turnover ends up in the tax haven. The process is entirely legal.’
The Daily Telegraph published a similar description of Google’s tax arrangements yesterday: ‘Google’s British operation is run as an agent of its Irish subsidiary, meaning it only pays tax on 10% of its earnings. The rest of the money is channelled via another subsidiary registered in Bermuda, avoiding tax.’
The paper noted that Eric Schmidt, Google’s Executive Chairman, had previously defended the company’s UK tax affairs: ‘We could pay more tax but we would have to do so voluntarily,’ he said. ‘It's very good for us, but to go back to shareholders and say “We looked at 200 countries but felt sorry for those British people so we want to [pay them more]” ... there is probably some law against doing that.’
The Mail on Sunday quoted Google in April as saying: ‘We have an obligation to our shareholders to set up a tax efficient structure and our present structure is compliant with the tax rules in all the countries where we operate.’ The company was responding to a Financial Mail analysis suggesting that ‘[five] internet giants avoided about £650m in UK corporation tax in 2010 by legally taking payments via offshore companies’.
Treasury Committee member John Mann expects Google to be called in over ‘tax avoidance’
A petition launched by the campaign group 38 Degrees, calling on Google to pay its ‘fair share of tax’, has attracted 47,000 signatures in its first week.
The petition tells Google: ‘There’s nothing responsible about only paying £6m in UK tax on hundreds of millions of pounds of revenue. Please do the right thing.’
The Daily Telegraph reported that ‘anger over the amount of tax paid by Google in the UK could escalate after documents showed the web giant contributed just £6m to the exchequer in 2011 on UK turnover of £395m’. The news story published on 8 August initially reported that turnover was £3.95bn – citing, according to a footnote, figures from Google that ‘misplaced a decimal point’. The amended story reported that the UK business reported a loss after tax of £24.1m.
38 Degress said its petition was published ‘using mistaken information from The Telegraph’. The error had been corrected, but ‘finding out exactly how much tax Google would pay if it weren't tax-dodging isn't straightforward’.
A Google spokesperson said: ‘We make a substantial contribution to the UK economy through local, payroll and corporate taxes. We also employ over a thousand people, help hundreds of thousands of businesses to grow online and invest millions supporting new tech businesses in East London. We comply with all the tax rules in the UK.’
The company had nothing further to add today in response to a report in The Independent indicating that Google chiefs faced ‘the prospect of being hauled before MPs to explain themselves over their tax avoidance schemes’, and reports in The Independent and the Daily Telegraph suggesting that Google pays much of the money it makes to the tax haven of Bermuda.
The paper reported that Labour MP John Mann, a member of the Treasury Select Committee, said ‘he had discussed the idea of looking at tax avoidance with his colleagues and expected Google in particular to be called in’.
Bermuda
‘Anger is growing over the revelations that a complex series of transactions sees Google move most of the money it makes into the tax haven Bermuda, paying a minimal sum in the UK,’ The Independent reported at the weekend.
‘Figures emerged last week showing that, while it paid more than it did in 2010, Google contributed £6m to the Exchequer in UK taxes last year,’ it said. ‘The company operates a scheme under which its Irish subsidiary employs Google UK as an agent, meaning the proceeds of sales made in the UK end up in Ireland. A commission of around 10% is then paid back to Google UK. That fee is taxable once costs have been deducted. Google Ireland then pays much of the money it makes to the internet giant’s Bermudan firm as a licensing fee, ensuring that a large portion of its turnover ends up in the tax haven. The process is entirely legal.’
The Daily Telegraph published a similar description of Google’s tax arrangements yesterday: ‘Google’s British operation is run as an agent of its Irish subsidiary, meaning it only pays tax on 10% of its earnings. The rest of the money is channelled via another subsidiary registered in Bermuda, avoiding tax.’
The paper noted that Eric Schmidt, Google’s Executive Chairman, had previously defended the company’s UK tax affairs: ‘We could pay more tax but we would have to do so voluntarily,’ he said. ‘It's very good for us, but to go back to shareholders and say “We looked at 200 countries but felt sorry for those British people so we want to [pay them more]” ... there is probably some law against doing that.’
The Mail on Sunday quoted Google in April as saying: ‘We have an obligation to our shareholders to set up a tax efficient structure and our present structure is compliant with the tax rules in all the countries where we operate.’ The company was responding to a Financial Mail analysis suggesting that ‘[five] internet giants avoided about £650m in UK corporation tax in 2010 by legally taking payments via offshore companies’.
