Books written by Ray Sullivan

Sunday, 19 May 2013

Taxing Times For Google

So, here's how it works, Sir. You agree to buy this lovely car, I'll throw in a years insurance and you can drive it away today. What's that? How do you pay? Sorry, I don't take cash. Debit or credit card only, or we can arrange finance. Cheque?  Well, I guess that's OK too. Make it payable to Honest Ray Sullivan Motors, Ireland please. Yes I know we're standing in a forecourt in London and this is a UK registered car but I pay lower taxes in Ireland, something to do with them being stony broke and keen to drag any income in that they can. Do I live over there? Do I look like I can afford a pad in the Emerald Isles? No, I live in London, where I sell my cars. Let's shake on it, but for transactional purposes this handshake is taking place in Ireland.  No I don't have a nervous tic, I was winking Sir.

Google have been coming in for a lot of stick in the UK over the last few months regarding their taxes. Google claim they pay everything they owe, it's just that they choose to pay it to whichever country asks the least from them. So they negotiate deals in the UK with UK firms with UK residents aimed fairly and squarely at UK consumers then address the billing invoice to an Irish account. Meanwhile, Mabel in Dublin picks up the mail in the morning, makes a cup of tea while she opens the envelopes, and then books the payments into the Google account.  At the end of the tax year Mabel files with the Irish revenue and pays a lower rate of corporation tax than would have been required if she had dealt with the UK Inland Revenue.

OK, so Google probably have more than one member of staff working in Ireland, but it is becoming increasingly obvious that they have been economical with the truth when they were questioned by the British Parliament a couple of months ago.  In fact, it looks like Google would have got away with their statements back then if it wasn't for a few dozen whistle-blowers who sent their pay statements to Reuters, the news agency.  Reuters investigated and have informed Parliament that it looks like the head of Google in the UK may have not been wholly honest.  In fact some Members of Parliament have suggested that Google may have committed Contempt of Parliament, which can result in gaol time for offenders.  Their deputy head in the region, Matt Brittan, suggested to Parliament a few months ago that none of their staff in the UK closed deals, but there is a lot of evidence that actually, they do.

Brittan is also understood to have said recently that almost nobody cared about how much tax Google pays, underestimating the national sentiment by about 60 million.  If we had a pound for every person in the UK that thinks corporations like Google should pay its fair share of tax then we'd quickly garner more money than Google have ever paid.  However this is hardly a news item, if you Google tax avoiding scams UK you'll find no end of entries going back years - Google are serial none payers of tax, and not just in the UK.  Hardly any of their profits make it back to any government - they have an arrangement in Barbados that means they pay hardly any tax.  Brittan calls it capitalism and makes no apologies for trying to keep all the  money to themselves, citing that they are a major employer in the UK (they do employ a couple of thousand people, so they are a middling employer), but it must be assumed his statement was a thinly veiled threat.  One MP pointed out there are plenty of large companies in the UK that employ sizable numbers of people, make good profits and pay their share of taxes.

Google aren't the only organisation in this country that is avoiding paying taxes.  It could be that they are up there with the best of them with regard to avoiding taxes - it's likely that many countries they operate in also fail to benefit from their profits generated by their own populace, and it looks like that includes the US.  But the irony is that their innovative mapping strategy that involves driving a car around every country in the world requires roads to do that, as does their self driving car scheme.  Where do they think the money for the roads comes from?

This is a story that will roll on - maybe Google will close its UK arm if the Government gives it a hard time.  It could shift its sales teams over the water to Ireland relatively easily and I'm sure there's plenty of unemployed people in Ireland who would love that to happen.  And maybe there would be no backlash to such a move.  However they may also find that the UK love affair may end too.  They're not the only search engine out there and traditionally us Brits have preferred underdogs and resented organisations that have got too big for their boots, and the arrogant statements coming out from Google right now might suggest their footwear might be straining a bit.  I'm sure Mr Brittan will have to return to Parliament and my advice would be for him to make sure he can back up his claims, because I suspect Parliament will be checking very closely.  In fact I expect they will Google and Bing every claim he makes.


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