Fury at Google’s minute tax bill

Google shares were marginally down Wednesday morning on the Nasdaq.

Google shares were marginally down Wednesday morning on the Nasdaq.

Published Oct 1, 2013

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London - Google faced renewed outrage as its latest accounts revealed that it paid less than £12-million corporation tax last year on bumper UK sales of £3-billion.

The “paltry” sum was criticised by MPs, who called for action to force the internet giant to pay more.

Its tax bill is only slightly higher than the previous year, when there was outcry over the way corporations such as Amazon, Starbucks and Google all found ways to avoid paying tax.

Google’s accounts show that it handed over £11.6-million in corporation tax for the 2012 financial year. Yet it raked in £3-billion in revenues from its UK operations.

Margaret Hodge, chairman of the influential Commons Public Accounts Committee, said: “Yet again, this is a paltry sum.

“They have been talking the talk about paying more tax, but not walking the walk.

“I remain of the view that the Government must engage in litigation to force Google to cough up.”

Mrs Hodge branded the company “calculated, unethical and evil” when its bosses appeared before her committee in May.

She said on Monday: “Despite all the adverse publicity and damage to their brand, they still seem to show no corporate responsibility over tax.”

Google was also accused of a “sleight of hand” by not including the £3-billion sales figure in its UK accounts, which suggest that it accumulated sales of only £506-million, leading to profits of £36.8-million.

But the £3-billion figure for UK sales is included in its US accounts. The online search giant has long claimed that its UK operations are a service arm of its Irish division.

It uses a complicated tax structure to register the vast majority of its UK sales in Ireland, in a practice branded “immoral” by MPs.

The structure has angered critics, who argue that the company operates in the UK and should pay full tax here. In the financial year 2011, Google paid £7.3-million in corporation tax, on sales of £3.1-billion.

Alex Smith, from the campaign group UK Uncut, said on Monday: “The search continues for Google’s tax contribution – and it seems that, as another year passes, this is still as elusive as its morality.

“The company’s slogan is ‘Don’t do evil’ but yet again we see it doing its level best to avoid tax and maximise its profits.’”Google’s accounts show the company has been forced by the taxman to set aside a further £24-million to fund back-payments, after tax officials closed one of the loopholes used by the US group. But critics said this was a small sum to pay. Tax accountant Richard Murphy said: “This does feel like the Revenue has come to a cosy deal with Google. It is an agreement to make it look as though tax is being paid, but it will leave Google off the hook over the big issue of whether it does business here.”

In 2010, HMRC began an investigation into Google’s tax affairs, which is expected to end in the coming months. The California-based internet giant paid just £10-million in UK corporation tax between 2006 and 2011, despite revenues of £11.9-billion.

Google boss Eric Schmidt recently defended his firm’s meagre tax contribution. “What we are doing is legal,” he said. “I’m rather perplexed by this debate. If the British system changes the tax laws, we will comply.”

A Google spokesman said: “Like most multinationals we pay the bulk of our £1.2-billion corporate tax bill where our business originated, in our case the US. That’s a rate of more than 19 percent, roughly what a UK-based company would pay.

“We’re also a significant contributor to the UK economy, having created over 2 000 jobs. This year alone we’ve invested more than £300-million in property, and tax related to our UK operations totalled more than £150-million.” - Daily Mail

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