Tax is a very touchy subject for most people, let alone big businesses, so when one of the largest and most well-known technology companies in the world posts some odd tax figures, it seems the world will suddenly notice.
Google has done just that, with the company posting a cool £395 million in revenue over the last year in the UK, only playing £6 million in taxes in England in the last year. A quick bit of maths shows this works out at a small 1.5% overall tax payment.
This tiny figure has brought the attention of the media and subsequently the British politicians according to The Independent newspaper. Said politicians are looking to start a formal investigation into its tax schemes by next spring.
Google bases its international operations in Ireland, where corporations pay a tax rate of just 12.5%. Using a legal tax loophole called “Double Irish,” the company can move a large chunk of its UK profits to Ireland and then to Bermuda where the company pays even less tax.
According to The Independent, Google’s Irish subsidiary basically employs Google UK as an agent, which means that Google’s UK revenue goes straight to Ireland and is classed as Irish business. The Irish headquarter then pays Google UK a 10% fee and, “once costs have been deducted,” that’s all Google UK pays taxes on.
Whilst this figure is small, Google would seem to have been getting away with it for a few years as the £6 million that was paid last year is a huge jump on the past six years where Google only paid £8 million in total taxes.
Google issued an official statement, saying;
“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.”
It will be interesting to see where Google goes with this, as the company has been keen in the past to be seen as a pro-business corporation and will surely be keen to rectify any negative public issues.
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