



Google accused of avoiding tax in UK


Raphael Satter

Focus on Google in Britain : Does it or does it not sell products in the country?

Focus on Google in Britain : Does it or does it not sell products in the country? Photo: Getty Images

UK lawmakers have subjected search giant Google to blistering criticism, accusing the US company of playing games with Britain's tax rules.

In his second appearance before Parliament in roughly six months, Google vice president Matt Brittin tried to defend his company's complex corporate structure to a committee of sceptical British politicians, many of whom seemed unconvinced by his assertion that Google was being transparent about how it paid its bills.

You use smoke and mirrors to avoid paying tax. 

Margaret Hodge, British politician


"Smoke and mirrors": Margaret Hodge.

"Smoke and mirrors": Margaret Hodge. Photo: Reuters


Brittin countered that his company's employees "fully comply with the law".

Google is one of several major multinationals – including Amazon, Facebook and Starbucks – whose convoluted corporate structures and disproportionately low tax bills have drawn increased attention in Britain and elsewhere.

Google, one of the world's most visible companies, has attracted particularly close scrutiny. The company has paid less than 0.1 per cent of its billions in British revenue back to the government in tax. In the first quarter of this year it made $US1.3 billion in revenue from Britain, according to a Google release. The company justifies low taxes by saying that the overwhelming majority of sales actually occur at the company's European head office in Dublin.

The ins and outs of what makes a company's revenue taxable in Britain are complicated, but much hinges on where the sales take place. At his first hearing back in November, Brittin said sales didn't take place in Britain. Staff at Google's brightly-coloured London office promoted the company's products, he said, but the sales took place in Ireland – which has a knockdown 12.5 per cent corporate tax rate.

An investigation by Reuters news agency cast doubt on those claims, revealing Google advertised for sales jobs in London, that London-based Google employees advertised themselves as sales people on professional networking profiles, and that many of Google's clients believed that the London staffers they were dealing with were sales people.

Brittin acknowledged that Google employed "people with sales skills".


But they weren't, he insisted.

"No money changes hands," he said. "To be clear, the transaction is completed with Google Ireland."

Lawmakers were unimpressed.




  • According to Google it complies with all UK laws and there doesn't seem to be any argument on this from the parliamentary committee. Nobody volunteers to pay more tax personally than they have to, so why should we expect companies to act any differently? If the parliamentarians feel that Google should pay more tax, then change the law, otherwise they would be best off stop complaining about companies minimising tax legally when they do the same themselves.

    Date and time
    May 17, 2013, 11:11AM
    • That's all well and good. But corporations also have reputations to protect, and a government enquiry into the legal tax strategies multinational corporations such as Google adopt can nevertheless help provide better outcomes for the people the government serves. Starbucks is a good example. And perhaps the "do no evil" crowd can likewise be shamed into putting more back into the markets and countries they get so much out of.

      Without multinational taxation frameworks, corporations get to pick and choose their tax havens, and nations are forced to compete with each other for the employment benefits etc. Companies always have a social responsibility, whether it's mandated in law or not, and with their growth over the past 100 years into multi-national entities, many seem to have forgotten the context within which they operate.


      Right... how much more parasitic can you be?

      Date and time
      May 17, 2013, 11:41AM
    • ^^ Seriously?

      The gov sets the rules, and then complain that companies play by the rules??

      And then people like you want companies to voluntarily pay MORE tax than they legally have to? What planet are you from? And while you're at it, how about YOU pay more tax than you legally have to - put your money where your mouth is.

      Date and time
      May 17, 2013, 1:05PM
    • The problem is the proliferation of Banana republics like Ireland that provide tax havens for companies like Google to essentially pay very low tax. If you're so bankrupt that you have to do this to survive, then you're bound to attract the morally bankrupt people who run corporations like Google to support you. I wouldn't mind so much if they weren't otherwise so insufferably smug about how cool and nice they are.

      Date and time
      May 17, 2013, 3:10PM
    • @Rob - "The gov sets the rules, and then complain that companies play by the rules??"

      It's multinationals that set the rules with their ability to shop around tax jurisidictions for the most favourable tax treatment. Single governments can do little about this. And given the moral position that you and most corporations seem to share (a very different corporation to the one in Adam Smith's day which recognised a company's moral obligations to support both their shareholders and the communities they operated in), it seems we'll need to rebuild multi-national tax regimes to ensure that the tax burden doesn't fall inordinately on those companies and individuals who are unable to tax the tax minimisation measures that these behemoths can.

      But I suppose you're the sort of guy who thinks that multi-millionaires declaring no income and paying no tax who draw down "loans" from family trusts aren't morally responsible for their actions either? Your logic being the state is culpable for their actions because the legislation is open to abuse?

      I guess in fairness though, corporations aren't sentient and thus have no morality, so it's probably not the best example. :)

      Date and time
      May 17, 2013, 3:41PM
    • @rob...
      I believe 'hehe' is paying the 'right' amount of tax, if he/she could get away with paying less he/she would. As Google and etc do, get away with paying less than they should. I for one would like to have the ability to pay 1% tax and get away with it. :)

      Date and time
      May 17, 2013, 4:25PM
    • Who can blame Google for trying to minimise their tax. I think it's everyone's duty to pay as little tax as possible, especially to over-taxed Socialist money-pits like the British and, lest we forget, Australian (ahem!) governments.

      Date and time
      May 17, 2013, 5:46PM
    • I disagree that the UK Govt accepts that Google is complying with the law. Their questions relating to where and how the sales are made indicates that they have doubt that the allocation of sales to the Irish division is legal.

      Date and time
      May 18, 2013, 5:41PM
  • Governments have to understand that physical geography means nothing in business. The results might not be fair, might seem unreasonable BUT transnational companies understand law and they exploit it any way they can. It is the capitalist paradigm. Lowest cost structure, maximum return to shareholders. If UK or any other national government want to ensure tax is paid where the revenue is earned they need to pass simple unambiguous tax laws and work WITH partner countries.

    Date and time
    May 17, 2013, 11:29AM
    • Google is the largest IT corporate in the world. Do you think any of these politicians, the goverments or anyone in the world can touch google. If they try all they will see is a get lost sign with a smile on googles face. Once the corporations reach certain stage like google and facebook. there us little any one or any goverment can do other than comment.

      Date and time
      May 17, 2013, 12:02PM

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