We Need To Talk About Google
Search engine leviathan Google is in trouble this week with the House of Commons public accounts committee (PAC) after light was shed onto the way it pays tax within the United Kingdom.
Google vice president Matt Brittin has faced committee chair Margaret Hodge in an attempt to fend off allegations of “devious, calculated and unethical” financial practices regarding the way that it pays tax on earnings in the UK. Hodge went as far as to call Google, a “company that uses smoke and mirrors to avoid paying tax” and that as an organisation they “do evil”.
Google VP Response
In a seemingly heated exchange of words, Mr Brittin's response was, “We comply fully with the laws that are set down by politicians. Tax is not a matter of choice, tax is a matter of following the law” suggesting that the company operates fully within the laws that are set on the payment of tax by corporations.
Mrs Hodge’s rebuttal was that there was a “stream of whistleblowers” insisting that “It was quite clear from all the documentation that the entire trading process and sales processes took place in the UK”. Mrs Hodge had allegedly seen a Google invoice and presentation in London on how to sell when involving staff from the UK.
One of the whistleblowers that Mrs Hodge has talked to allegedly stated that he was paid commission for sales and for “closing deals”. “This is a UK sale and should be subject to UK tax, I would ask that you reconsider what you are telling us as it doesn’t make sense” Mrs Hodge has said.
The Giant Stands Firm
Mr Britton admitted that sales staff within the UK promoted Google and encouraged people to spend money but insists that the actual transactions took place in Ireland so are not subject to the same corporation tax as they would be if based in the UK.
Mr Brittin defended the search giant’s business model and reiterated that “I stand by what I have said. I described very clearly how we operate.” He went on to defend the company’s decision to operate from Dublin, rather than London, by stating “We set that up because we wanted to be able to contract with customers across the whole of Europe, not just the UK.”
The Google vice president's response was not enough to calm the temper of Mrs Hodge who went on to sharply criticise HM Revenue and Customs chief executive Lin Homer for how HMRC staff interpreted the law for companies like Google.
HMRC Offers Advice
Mrs Homer, who appeared in front of the PAC shortly after Mr Brittin, is reported to have stated that HMRC is far better qualified than MPs to determine what taxes are due and suggested the saga was down to the current legislation by saying, “Unless you change the law, we cannot collect the tax people would like us to collect.”
This comes shortly after another internet giant; Amazon has been put in the spotlight over their payment of tax. Amazon uses a system to route sales through a Luxemburg based affiliate, Amazon EU Sarl, to ensure it pays as little tax as possible. In Amazon’s case, the timing couldn’t be worse as it has recently been revealed that Amazon actually pays less tax than it receives in fincacial grants from the UK taxpayer.
The debate continues.
This is an article authored by Sam Ryder who works in SEO & Marketing. Sam offers advice and inside knowledge on all the latest developments in the security and technology sector at LocksOnline. If you would like to read more of Sam’s blogs, why not follow him on Twitter.