Google Ordered Back To UK Parliament To "Explain Itself" Following Investigation

DavidGilbert99 writes "Last November Matt Brittin, Google's European chief gave a pretty convincing account of himself as he tried to explain why Google wasn't paying more tax in the UK. All the sales staff were based in Ireland apparently and the UK-based staff were there just to promote the platform for advertisers. Great. Nothing to see here. Move on please. Well, actually there is a little more to the story, as an investigation by Reuters has discovered. There are many sales staff in the UK with titles and responsibilities curiously close to what most people would call sales staff and as a result Mr. Brittin will once again have to face Margaret Hodge and the PAC to explain just what is happening."

Comments

I interviewed for Google in Ireland

[Anonymous Coward]

I did a couple of interviews for Google in Ireland, yet all my interviewing was through the UK... 0.o

Why explain himself?

[cerberusss]

Why does this guy get to explain himself? In my country, the IRS just sends me a letter about me misbehaving, and says I've got 30 days to pony up the cash.

Why the flying duck does a company then gets to make apologies, when it's obvious by now that they're cheating?

Re:Why explain himself?

[Captain Hook]

Why does this guy get to explain himself? In my country, the IRS just sends me a letter...

This isn't the HMRC, this is a special parlimentary committee who are trying to work out how the companies are legally avoiding tax.

The companies questioned (Google, Amazon, Starbucks + 1 other I can't remember off the top of my head - probably MS) were all choosen because they pay very little tax in relation to the turnover the companies are reporting in the UK, and are therefore either very badly run or are engaged in some very effective tax avoidance.

Some of the answers given by the executives were extremely funny, the Amazon executive especially didn't perform well, but Google actually came out of it looking reasonably good, they seemed to be quite honest saying they based most of their operations in Ireland because of it's lower Corporation Tax level and that it wasn't hiding anything while Amazon twisted and turned trying not to say the exact same thing about it's luxembourg HQ.

The Google executive is being brought back because it's now been shown that most of the Google operations are based in London, not Dublin and he was therefore telling porkies.

He's not being brought back in to explain his tax affairs, he's being brought back for lying to a government committee.

Re:Why explain himself?

[IamTheRealMike]

Also, there's nothing really to explain here. Nobody is claiming the law has been broken or tax was mispaid. Hodge is just an idiot who wants to spend more money to make herself more popular and is holding "show trials" of companies who she believes somehow are too good at taking deductions. This is hilarious because she herself has a stake in a large company that uses exactly the same tax strategies.

Re:Why explain himself?

[IamTheRealMike]

That's not how the law is written. The money that is being charged for the ads are paid to the Irish subsidiary. Therefore Irish taxes apply. There's no legal definition for what it means to "make a sale" in that regard and the location of the first person you talk to on the phone makes no difference. Otherwise if you call up a company and your purchase is handled by an Indian call center, is the sale suddenly taxable in India now even if you're a Brit and pay a British company? No, that's not how tax works.

If someone thought the law was actually being broken, then the right thing to do is for HMRC to prosecute. Not summon random executives to "explain themselves" to Parliament. That's a waste of time that is guaranteed to achieve nothing.

Re:Time to start taxing revenue instead?

[iserlohn]

For an example is how prevalent this practice is, look at how Pepsico structure it's operations in the UK. They sells crisps (ie. potato chips) in the UK under the Walkers brand. There was an article no long ago in one of the major newspapers that described how they are able to effective transfer all the profits away from the UK part of the business to avoid paying tax. They did it by assigning all the potatoes that goes into the making of the crisps to be owned under the Swiss subsidiary. These are processed and made into crisps in the UK owned plants, which makes almost no profit in its operations. The finished product, still owned by the Swiss subsidiary is sold, and all the profits make are accounted for under the Swiss operation.

The problem with is that in the EU, we have the free movement of goods through economic union, but there is not overriding political union to plug the loop holes. This needs to be addressed somehow, or otherwise, we are just subsidising Switzerland, Luxembourg and Ireland through tax loopholes.