Search engine Google’s attempts to avoid paying tax in cash-strapped Britain have been grassed up to the press by its customers.
According to the Drum , Google’s own customers have had a gutsful of the search engine’s tax avoiding ways and are rushing to explain how the American company is short changing the UK.
Google’s cunning plan was simple. All it had do to was say that its sales teams were based in Ireland where taxes are cheap and the Guinness tastes better. It even testified before Parliament to this.
Under international tax law, companies are allowed to engage in promotional work in a country without creating a tax residence, but lawyers and academics said negotiating on British soil could mean Google’s UK revenues became assessable for income UK tax purposes.
But that did not tally with the experience of Google’s customers who were dealing with sales staff based in London. To make matters worse, the company’s London job ads even talked about “sales quotas” and the need to “drive revenues”.
The Drum, a magazine for marketing professionals, asked 80 ad buyers and digital agencies – companies that purchase advertising products on behalf of clients.
Of the 29 that replied to the survey, almost 80 percent of respondents said they dealt with London when buying Google advertising. Around 14 percent said they used Dublin, the remainder said they “did not know”.
The Drum said that when Google customers were asked what they considered they were doing when dealing with Google’s London team, 76 percent said they considered they were buying from them. 17 percent said they were receiving general advice in order to buy through Dublin, the Drum report added.
But Google might have misunderstood the mood in the UK. While it is true that the country has a government that would rather tax the poor rather than big corporations, the government is about as popular as the Yorkshire Ripper for adopting this policy.
British Prime Minister David Cameron has said he is working to address the problem as soon as the last poor person is on the streets, and plans to put it on the agenda for the G8 meeting of the world’s largest economies to be held in Northern Ireland in June.
You can tell how committed he is to dealing with the problem, most people would have thought there was enough evidence to jail Google executives for tax avoidance. But if Cameron started locking up his chums in big business for tax avoidance he would be sitting alone at the next Etonian reunion.
It has been estimated that from 2006 to 2011, Google generated $18 billion in revenues from Britain, according to statutory filings, and Google UK paid just $16 million in taxes.
Last week British MPs planned to call Google back to testify to a parliamentary committee over lie allegations.
Before that happened, Google appears to have started changing the wording of some job adverts so that they sound less sales related. Yeah, that should do it.
For example, a reference to “acquire new strategic medium-sized clients” was removed from an advertisement for an “acquisition manager (UK/Ireland)”. Prospective candidates are now told they need to “approach prospects with tailored presentations and industry data”.
Reuters noted that adverts for jobs based in Paris and Germany, which last month carried sales-related role descriptions, were amended by Friday afternoon. So clearly Google has nothing to hide at all.
Google says it employs around 1,000 London-based “digital consultants” who educate customers about the benefit of Google products. While they did “encourage” clients to buy, the company said all selling was done by “a couple of hundred” staff in Dublin.