Google must be fully investigated over its “highly contrived” tax arrangements designed to avoid corporation tax on its multibillion-pound UK revenues, an influential MPs’ committee has demanded.
A House of Commons Public Accounts Committee report labelled the internet giant’s claims that its UK sales activities take place in low-tax Ireland as “deeply unconvincing”.
The company’s account of its operations made “absolutely no sense” and had been contradicted by whistleblowers, the committee found.
While urging HM Revenue & Customs to launch a probe into Google, the report said it was “extraordinary” the firm’s tax arrangements had not been challenged.
And the cross-party committee also warned that the UK’s big accountancy firms had damaged their reputations by helping big business clients avoid tax, calling on them to recognise that “the public mood on tax avoidance has changed”.
Committee chairwoman Margaret Hodge branded Google’ arguments “brazen” and said the only way for it to repair its damaged reputation was to ensure it paid a fair share of tax in the countries where it earns its massive profits.
Google made around £11.5bn in revenue from the UK between 2006 and 2011, but paid just £10m in corporation tax, found the PAC report.
During this period, the main rate of corporation tax was between 30% and 26%.
The report found: “Google defends its tax position by claiming that its sales of advertising space to UK clients take place in Ireland – an argument which we find deeply unconvincing on the basis of evidence that, despite sales being billed from Ireland, most sales revenue is generated by staff in the UK.
“It is quite clear to us that sales to UK clients are the primary purpose, responsibility and result of its UK operation, and that the processing of sales through Google Ireland has no purpose other than to avoid UK corporation tax.
“This elaborate corporate construct has damaged Google’s reputation in the UK and undermined confidence in the effectiveness of HMRC.”
Ms Hodge said: “Google brazenly argued before this committee that its tax arrangements in the UK are defensible and lawful. It claimed that its advertising sales take place in Ireland, not in the UK.
“This argument is deeply unconvincing and has been undermined by information from whistleblowers, including ex-employees of Google, who told us that UK-based staff are engaged in selling.
“The staff in Ireland simply process the bills. Google also conceded at this second hearing that its engineers in the UK are contributing to product development.”
Ms Hodge had previously questioned Google’s famous “don’t be evil” motto, telling the firm’s vice-president Matt Brittin: “I think that you do do evil, in that you use smoke and mirrors to avoid paying tax.”
A Google spokesperson said: “As we’ve always said, Google complies with all the tax rules in the UK, and it is the politicians who make those rules.
“It’s clear from this report that the Public Accounts Committee wants to see international companies paying more tax where their customers are located, but that’s not how the rules operate today. We welcome the call to make the current system simpler and more transparent.”
A Treasury spokesman said: “This Government is committed to creating the most competitive corporate tax system in the G20, but this goes hand-in-hand with our call for strong international standards to make sure that global companies, like anyone else, pay the taxes they owe.
source:Skynews
Tags: corporation tax, Google, highly contrived, Tax
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