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Google Settles Decade-Long Tax Dispute In UK (thestack.com)

Posted by yaelk on from the whats-happening-over-the-pond dept.

An anonymous reader writes: Alphabet, Inc., parent company to Google, has agreed to pay $185 million to settle UK taxes going back to 2005. The company has also agreed to adopt a new approach to taxes in the UK going forward. While this is a sizeable figure, many believe it is too little, and constitutes a sweetheart deal between the government and Google. Matt Brittin, the President of EMEA Business and Operations for Google, was a participant in a televised hearing today in which UK lawmakers questioned the $185 million settlement. He stated, "We find ourselves in the position where we are paying the tax that the tax authorities told us to pay."

43 of 70 comments (clear)

  1. Old news by whoever57 · · Score: 4

    Old news

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    The real "Libtards" are the Libertarians!
    1. Re:Old news by Anonymous Coward · · Score: 1

      The links you provide are old news, yes.

      However:

      > Matt Brittin, the President of EMEA Business and Operations for Google, was a participant in a televised hearing today

      *This* story is about the hearing which happened in the last 24 hours.

    2. Re:Old news by smallfries · · Score: 3, Interesting

      So a company that controls a sizeable portion of the flow of information through the largest communications network in the world. Vast power over the importance and presentation of image. And it was given a sweet tax deal by a group of people whose careers depend entirely on their image as presented in the media.

      It may be old, but was it ever news?

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    3. Re:Old news by whoever57 · · Score: 1

      *This* story is about the hearing which happened in the last 24 hours.

      OK, there is some new news there, but the headline and the first half of the summary is about old news.

      --
      The real "Libtards" are the Libertarians!
    4. Re:Old news by Xest · · Score: 5, Informative

      The thing that's new about the story was the grilling Google's EMEA boss got in front of a parliamentary select committee yesterday and what came out of that.

      Whatever you think about large corps and taxes, that guy got absolutely slaughtered and it's incredible Google sent anyone that inept to represent themselves as it's done Google more harm than good on the tax front.

      The MPs basically asked him why Google has only paid 3% tax for the period when the rate is 20%, to which he replied that they do pay the 20% owed by law. They ask him on what figure the 20% was paid given that the tax paid only amounts to 3% of declared profit and he simply couldn't answer. This means he's either incredibly inept in that he was wholly unprepared to answer an obvious question on the topic at hand, or Google is afraid to admit how it comes to it's profit figure because it's still hiding something that may get it in bother - if it was legal and in good standing, why hide your profit figure that you're paying tax on?

      He was also asked if he felt the £130 million was fair, to which the Google guy replied yes, and then the MP followed up with the question "If it's fair, why didn't you pay it in the first place?", for which he had no answer. He was later asked a similar question as to whether he agreed the £130 million was legally owed, to which he answered yes.

      He claimed there's no legal mechanism to pay more tax in the UK and therefore he can't, to which it was pointed out that that's simply false.

      The problem is, even if you're of the belief that it's okay for companies like Google to only pay what is legally required, rather than what is intended, Google's exec here twice said the £130 million bill was both acceptable and legally owed, which inherently means that he has now admitted that Google didn't simply carry out tax avoidance, but carried out outright tax evasion.

      Which is why in my opinion the whole large corporation tax debacle isn't as clear as many have argued - the often parroted large corporation line of "We pay what we legally have to" is slowly unraveling, and it's becoming increasingly clear that large corps haven't even been paying what they legally have to, let alone what the law intended (even if badly). The fact is that in many jurisdictions where this is an issue it's simply not clear that these companies are merely only engaging in legal avoidance rather than illegal evasion whatever the companies themselves may now claim. At least one corporation, Google, has now admitted that it carried out tax evasion by accepting that it did in fact legally owe these £130 million in taxes but previously chose not to pay them.

      The question now really is what happens with all the other big players. In many ways Google may have gotten off easy by going first, because there's more pressure than ever for government to more tightly scrutinise these deals and to charge penalty costs (which Google was let off from). Google got off lightly for committing tax evasion in the UK, but it's not clear due to the backlash from that whether all the others will get off so lightly. We already know there will at least be some others given that Amazon and Starbucks' tax deal with Luxembourg has already previously been found to have been illegal.

    5. Re:Old news by Coisiche · · Score: 2

      There's probably financial reward for someone as well... at least once Google figure out how to give a non-exec position where someone as useless as George Osborne can't do any harm.

    6. Re:Old news by AmiMoJo · · Score: 4, Informative

      This isn't limited to just Google, most large companies do it. For example, in 2008 Starbucks claimed to have made a £26m loss, yet their cheif exec Howard Schultz told investors the business here was so successful he planned to apply the lessons to the company's biggest market in the US. Somehow they keep making these horrendous losses (to be fair their coffee is shit) and the bosses keep expressing their great satisfaction.

      In all Starbucks paid about £18m tax on £3bn profit over 18 years operating in the UK. If only I had known I could make £3bn profit by losing millions every year and paying next to no tax, I'd have been a billionaire long ago.

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    7. Re:Old news by Anonymous Coward · · Score: 1

      British government is stuck between rock and a hard place. If we made it "fair" for these foreign companies to pay tax in Britain, surely British companies will have to do the same in other countries?! Which we don't really want... hence softly-softly approach and "bad bad immoral company" to appease common folk.

      Britain, being on of the main beneficiaries of common/single/global market, designed this scheme in the first place. Bit of a problem now that the flow has reversed.

    8. Re:Old news by nickovs · · Score: 1

      They didn't need to give him a non-exec position. All they needed to do was give him and his son a nice plane ride and some Superb Owl tickets.

      --
      If intelligent life is too complex to evolve on its own, who designed God?
    9. Re:Old news by shawn2772 · · Score: 1

      You've bought the whole corporate tax bit, hook, line and sinker. Corporate taxes are evil and should be abolished, not for the good of corporations, I don't care about them, but for the good of the people.

      Corporations don't pay taxes. Ever. Corporations are people, and people pay taxes. Shareholders pay taxes, employees pay taxes, suppliers and customers pay taxes -- except when the suppliers and customers are corporations. Every penny of tax ostensibly paid by a corporation is funded either by higher prices to customers, lower payments to suppliers, lower wages to employees, or lower profits to shareholders. 100% of the tax burden is ultimately passed on to individuals.

      Why, then, do governments want to tax corporations? Because although every penny of corporate tax comes from the pocket of some individual, it's very, very hard to figure out who, and even more importantly, it's tax revenue that voters don't know they're forking over.

      Taxes are necessary, but voters should see what they're paying so they can evaluate whether or not they're getting good value for their money, or whether they should vote for alternative structures in which they purchase services from entities other than the government. Corporate taxation undermines that by hiding the taxes from the taxpayers. You can't tell, for example, that you paid a little more for your coffeemaker (above and beyond sales tax or VAT) so that the manufacturer of the coffeemaker, and all of the corporations in its supply chain, could pay their taxes. You can't tell that your paycheck is a little lower so that your employer can pay taxes. You can't tell that your rate of return on your retirement investments is a little lower so that the companies whose shares your hold can pay taxes.

      Moreover, are corporate taxes progressive, regressive, or something in between? Again, it's very hard to know, and it's almost impossible for policymakers to allocate those taxes across the population in any sort of fair or effective way. Odds are, given who is in control of deciding how corporations set their prices, pay their employees, deliver dividends to their shareholders, etc., they're highly regressive.

      Corporate taxes are just hidden, unmanageable taxes levied on voters, and as such they're wrong and should be abolished.

    10. Re:Old news by Xest · · Score: 1

      You're assuming I'm not aware of this, and yet you've explained yourself why you'll always struggle to get rid of them in practice - it's politically untenable to tell people you're drastically raising their taxes, even if you do explain to them that stuff they buy will become cheaper.

      I fully agree that in an ideal world we'd follow the path you suggest, and similarly I've always argued that true costs should be pursued in other ways. For example, I've long been an advocate of the fact that health service costs for health issues that stem from pollution (i.e. asthma) should be levied against carbon emitting companies, such that the price of coal would reflect it's true cost, rather than have it's true costs hidden by subsidy to the tax payer. This would force energy bills up to reflect the true cost of coal and would bring down the healthcare bill drastically reducing the need for high taxes whilst also encouraging companies to move to clean energy because when the real cost of coal is realised it's astoundingly expensive compared to nuclear etc.

      But as nice as doing this would be, and forcing people to understand the real cost and value of things allowing the market to work in places it doesn't currently because true costs are hidden, it's just never going to happen. The idealist in me comes second to the realist - I don't believe there's much value in arguing that we're stupid for not basing our lives around that which is simply not practical and never going to happen in the near term. It's a great philosophical discussion to have, and great as a very long term goal (decades away), but it really doesn't help us right now in the reality we live in.

    11. Re:Old news by whoever57 · · Score: 2

      You have bought the Tea Party story, hook line and sinker.

      The effect of corporation taxes is mostly in reduced payouts to shareholders.

      We do know who owns corporations: overwhelmingly it is the top 1%. So what you are advocating is a tax cut for the 1%.

      --
      The real "Libtards" are the Libertarians!
    12. Re:Old news by smallfries · · Score: 1

      The greatest inequality in the world today is that individuals are taxed on income while companies are taxed on profits.

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    13. Re:Old news by Vainglorious+Coward · · Score: 2

      It was also illuminating that he doesn't know how much he himself is paid.

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  2. anyone else tries this on their tax return by ihtoit · · Score: 5, Informative

    can expect crawl-up-your-arse audits for the next lifetime. 2.5% tax is a fucking insult, compounded by the chancellor getting free fucking tickets to the Superbowl paid for by... FUCKING GOOGLE!

    --
    Political debates have me rolling my eyes so much I think I got optical whiplash. I should sue. - Foamy The Squirrel
  3. Proves there's strong incentive for tax avoidance by JoeyRox · · Score: 2

    Best case scenario is you avoid a shitload of taxes. Worst case scenario is that you negotiate your tax bill down after getting caught and still wind up paying less in taxes than you would've if you adhered to the tax regs to begin with. Seems like a win-win to me.

  4. Re:Proves there's strong incentive for tax avoidan by HornWumpus · · Score: 2

    Tax avoidance is legal by definition. Why would anybody pay more then they were legally required? When millions are involved, it's worth hiring shysters. Duh.

    You are thinking of 'Tax evasion'.

    --
    John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
  5. Re:Proves there's strong incentive for tax avoidan by JoeyRox · · Score: 1

    The line between tax avoidance and evasion is exceedingly thin for the aggressive tax strategies these companies employ. I was being generous by using the term avoidance.

  6. Re:Proves there's strong incentive for tax avoidan by HornWumpus · · Score: 1

    If there is room for shysters to argue about it, it's avoidance until declared otherwise by a court.

    'Grey Area' is one of the shyster class's most powerful spells.

    --
    John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
  7. Re:told us... by plopez · · Score: 4, Insightful

    ^They complain bitterly about taxes then expect us to train their work force for free.

    --
    putting the 'B' in LGBTQ+
  8. Re:told us... by wisnoskij · · Score: 1

    Huh?? The way I understood it is that the majority of us pay some corporation to tell us how much tax to pay. It would be far cheaper and easier if the government could just tell us how much they wanted, is that how it works in some countries?

    --
    Troll is not a replacement for I disagree.
  9. Cheap fine by manu0601 · · Score: 1

    185 million USD is small given Google benefits. Perhaps they spent more in attorney and lobbyist fees to get that result!

  10. This is what I hate about Conservative Politics by rsilvergun · · Score: 2

    sooner or later they win, because they have unlimited money and can just wear everybody else down. Here in the states the corps are salivating over Obama exiting the White House so they can bring back all those profits tax free without contributing a cent to the civilization that made it all possible. They win, and we all lose (schools, health care, food banks, etc).

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    1. Re:This is what I hate about Conservative Politics by wildstoo · · Score: 1

      Dear AC,

      Congratulations on seeing the title of the post and absolutely nothing else. He didn't even mention UK politics. Fun fact: the word "Conservative" doesn't always refer to the UK Conservative Party. Perhaps you should try sobering up.

      Get it? Durrr.

    2. Re:This is what I hate about Conservative Politics by Fragnet · · Score: 1

      Where do you think Google's cash is? Under a fucking mattress? In a big shed at the bottom of someone's garden? It's cash is invested all over the world. It's working to improve the economy because that's what free trade and international investment does. World poverty has fallen by a huge amount over the last quarter century, except in places like Venezuela, where left wing governments express the same kind of thought patterns you do.

  11. I want to be Google by Harold+Halloway · · Score: 1

    I want to pay tax not on my income but my profits because at the end of the month, I don't have any.

  12. Re:Proves there's strong incentive for tax avoidan by serviscope_minor · · Score: 3, Interesting

    Why would anybody pay more then they were legally required?

    Because most people have some degree of moral backbone and understand that the letter of the law is not the same as morals.

    Most people don't take advantage of tax loopholes. Most people just have tax deducted from salary in the completely normal way and pay no more thought to it. Some people fill in a tax return and take advantage of a few rebates here and there if applicable[*]. Now, some people screw around with offshore shell corporations to reduce their taxes. That's an option open to many people but most simply don't bother.

    So yeah, most people probably pay more tat than they're legally required because the combination of hassle and the skeezy feeling that you're being a bad person when you find some cheat to lower your taxes just is not worth it.

    [*] Please don't try to insult my intelligence by claiming that rebates (which are intended by the government and there to promote certain kinds of behaviour) are equivalent to loopholes which are by definition unintended.

    --
    SJW n. One who posts facts.
  13. Re:told us... by egladil · · Score: 3, Informative

    Yes, actually. At least here in Sweden. At the end of the year your employer, your bank etc report your total income for the year, and some other things that affect tax (like loan interest expenses, savings interest income. Also if you have used some tax deductible services (i.e. home renovation) those companies have to report that as well. Then sometime during spring the tax department sends out a preprinted form to you. If everything is correct you can just sign it and send it back. Otherwise you fill in the changes, sign it and send it back. Or, if you don't feel like beeing a luddite you can use the online service to see and sign the form even before it arrives in the mail.
    Then you have until august (I think) to pay your taxes. Except your employer already deducted a standard amount of taxes on your salary and payed it for you, so most likely you will get a tax return instead. Which is payed to you in august as well, except if you used the online service. In that case you receive it in june.

    So to sum the process up:
    1) Log in to online service during spring.
    2) Sign prefilled online form.
    3) (No step three)
    4) PROFIT (aka tax return around midsummer)

  14. About 2 quid per head by Hognoxious · · Score: 1

    About 2 quid per head. Total game changer, that.

    --
    Confucius say, "Find worm in apple - bad. Find half a worm - worse."
  15. I'll not be paying tax this year by Anonymous Coward · · Score: 1

    I'm a UK citizen who runs a small business and I've always paid my taxes. Not any more.

    This year it looks like my business has wound down significantly. Revenues are about 2/3 of what they were last year. Next year will be more of the same. Of course this isn't really the case it's just that I'm now not declaring the majority of cash jobs. I'm also encouraging people to always pay cash where possible.

    If big corporations aren't required to pay tax then neither am I. I've tried petitioning my MPs to do something but they do nothing. So the only decent response is to no longer play the game.

    1. Re:I'll not be paying tax this year by HornWumpus · · Score: 1

      Congratulations on waking up. I hope your not just trolling.

      --
      John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
  16. Re:told us... by houghi · · Score: 1

    Same in Belgium. Signing is done with your eID card. Worried about having an eID card (Card with chip) and what they might hide? Download the source code en do whatever you want with it. http://eid.belgium.be/en/devel...

    It works under Linux and it is a shame that not more of this is used for websites. You could easily order something and not only will your adress be filled out, the website will be sure it is correct and age is verified.

    It can also be used as a legal signature for contracts, unlike e.g. email or fax.

    --
    Don't fight for your country, if your country does not fight for you.
  17. Tax paying is easy by nospam007 · · Score: 1

    "We find ourselves in the position where we are paying the tax that the tax authorities told us to pay."

    Really? I'm in the exact same position, how cute.

  18. Suggested searches for "Conservatives are..." by Vainglorious+Coward · · Score: 1

    It has been noticed that since this sweetheart deal, typing "Conservatives are" into google doesn't throw up any suggested searches (contrast with those suggested for "Labour are" and "Libdems are"). Correlation is not causation of course, could just be a happy coincidence.

    --
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  19. Re:Proves there's strong incentive for tax avoidan by HornWumpus · · Score: 1

    What kind of crazy definition of 'loophole' are you using?

    Loophole is a pejorative for a deduction/credit you don't like. That is all.

    You are morally required to 'starve the beast'. Even if you lose money on taking the deduction, cost of preparation etc, morally you should still take it.

    --
    John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
  20. Re:Proves there's strong incentive for tax avoidan by serviscope_minor · · Score: 1

    Loophole is a pejorative for a deduction/credit you don't like. That is all.

    Jesus do you even know what loophole means? The govrnment does not provide deductions then complain when people use them. A loophole is an unintended consequence of tax law, like the double Irish.

    Your statements is literally trying to change the meaning of commonly used phrases.

    You are morally required to 'starve the beast'.

    No you aren't.

    Even if you lose money on taking the deduction, cost of preparation etc, morally you should still take it.

    Deductions aren't loopholes. The words mean different things. Go read a dictionary before you make a bigger fool of yourself.

    --
    SJW n. One who posts facts.
  21. Re: Proves there's strong incentive for tax avoida by cyber-vandal · · Score: 1

    The reason you live in a nice safe developed nation is because you have a powerful government that can defend that nation and provide services that mean you're unlikely to starve to death or to die of a preventable disease amongst many other services that you take for granted. Is our system perfect? Nowhere near. Would it be better if we had to get those services from the private sector? No because large numbers of us would be excluded from getting those services due to cost.

  22. Re:Proves there's strong incentive for tax avoidan by HornWumpus · · Score: 1

    Bullshit. Those 'loopholes' were all passed deliberately.

    In some cases smart people use the loopholes for purposes other then the social engineering they were originally intended for (unintended consequences). But the 'loophole' is a deduction/credit that was DELIBERATELY PUT INTO LAW.

    You are using your own private definition of 'loophole'. All deductions are 'loopholes' to someone who doesn't like them.

    --
    John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
  23. Re: Proves there's strong incentive for tax avoida by HornWumpus · · Score: 1

    We keep the useful 10% of government and fire the dead weight. You are on crack if you believe what you just wrote.

    --
    John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
  24. Actually it's basically under a mattress by rsilvergun · · Score: 1

    It's all sitting in banks doing nothing. World Poverty has fallen not due to investment but due to massive improvements in food growing & distribution tech... most of which was funded the gov't... and by laws and subsidies that keep food prices down.. again gov't. Venezuela was doing just fine thank you until the Saudi's decided to dump oil on the market. They're struggling like every oil nation now. They're struggle is a little more obvious because unlike the Suadis they don't just abondon their lower class at the first sign of trouble.

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    1. Re:Actually it's basically under a mattress by Fragnet · · Score: 1
      Money doesn't sit in banks doing nothing. The bank lends it out for other people to do things with it.

      Venezuela was doing just fine

      Hahahahahahahahaha.

  25. Re:Proves there's strong incentive for tax avoidan by serviscope_minor · · Score: 1

    Bullshit. Those 'loopholes' were all passed deliberately.

    OK, I understand the problem now: you're a complete idiot. Glad we cleared that up.

    --
    SJW n. One who posts facts.
  26. Re:Proves there's strong incentive for tax avoidan by HornWumpus · · Score: 1

    So you think these loopholes magiced their way into the code?

    You think there is no logic to the way that overseas revenue and costs are allocated?

    Study the subject, and propose a better system or shut the fuck up. These laws have been hashed out over decades by people much smarter than you and mostly work.

    You'r just pissed that government power is checked by the ability of people and business to vote with their feet. Tough shit. That is a _good_ check on government revenue grabs.

    --
    John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'