Search engine Google is not paying much tax in the UK and apparently the nation’s Parliament is jolly cross about it.
According to Cnet, Google has found a really good way to avoid paying shedloads of UK taxes.
Parliament is thinking of dragging a Google executive into the mother of all Parliaments to explain how the company saves so much in taxes, despite generating massive profits each year.
Google paid only £6 million pounds in UK taxes after generating a profit of £395 million pounds.
The way it does it is by using its Ireland-based subsidiary which has an agency agreement with Google UK. This means that 90 percent of profits are transferred to Ireland. From Ireland, the company pays a host of fees, including licensing charges to a Google-owned Bermuda firm. In other words there is nothing left of the profits which stay in the UK to be taxed.
At the moment Google’s strategy, often called the “Double Irish” technique, is perfectly legal.
It is not as if Parliament did not know what Google was doing. In 2010, a report detailed the ins and outs of Google’s savings scheme and found that the company saved $3.1 billion in taxes over three years.
Google has been trying to reassure the government that it does not need to change anything. Taxes are just one piece of what companies deliver to a country’s economy.
Google paid “a substantial contribution” to the UK economy through local, payroll and corporate taxes.
Google employed more than a thousand, helped hundreds of thousands of businesses to grow online and invested millions supporting new tech businesses in East London. Don’t mention Google Panda.
So in other words leave us alone you naughty Parliamentarians. We are the great and mighty corporation – and only poor people pay tax.
Then again, Google has said it would happily pay a larger rate of tax – this time last year – if the law actually required it to do so.