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

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."

Comments

Old news

[whoever57]

Old news

Re:Old news

[smallfries]

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?

Re:Old news

[Xest]

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.

Re:Old news

[Coisiche]

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.

Re:Old news

[AmiMoJo]

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.

Re:Old news

[whoever57]

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%.

Re:Old news

[Vainglorious Coward]

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

anyone else tries this on their tax return

[ihtoit]

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!

Proves there's strong incentive for tax avoidance

[JoeyRox]

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.

Re:Proves there's strong incentive for tax avoidan

[HornWumpus]

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'.

Re:told us...

[plopez]

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

This is what I hate about Conservative Politics

[rsilvergun]

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).

Re:Proves there's strong incentive for tax avoidan

[serviscope_minor]

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.

Re:told us...

[egladil]

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)