There’s mounting anger in the UK over Google’s £130 million bill.
An HMRC investigation was settled with a £130 million bill for the Californian search giant for the past 10 years of activity.
Critics say this pales in comparison to Google’s £4 billion annual revenues in Britain.
The company’s European arm is headquartered in Ireland, which allows it to pay a lower rate of tax than it otherwise would.
Labour is furious
Labour is leading the criticism of the tax deal. On Monday, shadow chancellor John McDonnell was granted an urgent question in Parliament to ask about the deal.
He alleged that Google’s “effective tax rate is now around 3%.”
McDonnell — and multiple other MPs — are calling on the government to fully explain how the £130 million figure was reached.
David Gauke, a treasury minister, defended the government (George Osborne, chancellor of the exchequer, was not present). He denied that there was a “special” tax rate for Google, but declined to comment on the company’s specific rate due to confidentiality laws.
He was asked whether Google had broken any laws, to which he said he couldn’t comment (via The Independent): “I cannot comment because I am not privy to information that is not in the public domain. I cannot comment on that. What I can say is that there has been an inquiry that has been in place for some years, that inquiry has now reached a conclusion. The consequence is Google has stated of that inquiry is that an additional £130m is being paid to the Exchequer.”
Downing Street distances itself
George Osborne initially hailed the deal as a “major success.”
But Downing Street has declined to endorse this rhetoric.
The Telegraph reports an aide to David Cameron describes it only as a “step forward” and a “positive step.”
They said: “Clearly, there is more for the government to do to make sure that multinational companies pay their tax. The assessments of this are made by HMRC.”
Boris Johnson: “Derisory”
Boris Johnson, Conservative mayor of London says that the amounts paid by tech companies is “derisory.” He wrote in a column for The Telegraph: “We buy tens of billions of pounds’ worth of American hardware, software and services — and yet these companies pay quite derisory sums in tax to the UK Exchequer: derisory, that is, when you consider how much dosh they are earning from us all.”
But, he cautioned, you shouldn’t attack Google for this. “It is absurd to blame the company for ‘not paying their taxes’. You might as well blame a shark for eating seals. It is the nature of the beast; and not only is it the nature of the beast — it is the law. It is the fiduciary duty of their finance directors to minimise tax exposure. They have a legal obligation to their shareholders.”
In short — if Google isn’t paying enough tax, it’s Britain’s fault, not Google’s.
France is after much more
The Times reported on Tuesday that Google is engaged in similar discussions over tax in France. The sum being discussed is allegedly three times larger than the UK tax bill, even though the company has a larger presence in Britain.