Sign in. It’s quick, free and it’s up to you.
An account is an optional way to support the work we do. Find out more.
TECHNOLOGY GIANT GOOGLE is to pay £130 million (€172 million) in back taxes to Britain following a government inquiry into its tax arrangements, a company spokeswoman has said.
It follows a six-year probe by Her Majesty’s Revenue and Customs in response to controversy over low taxes paid by multinational corporations which operate in Britain but have headquarters elsewhere.
“We have agreed with HMRC a new approach for our UK taxes and will pay £130 million, covering taxes since 2005,” a Google spokeswoman said.
The way multinational companies are taxed has been debated for many years and the international tax system is changing as a result. This settlement reflects that shift.
In future, Google will pay taxes in Britain according to revenue from advertisers based in Britain, something that “reflects the size and scope of our UK business”, the spokeswoman said.
The BBC reported that Google would now register a greater proportion of its sales activity in Britain rather than Ireland, where its European headquarters is based and which has a lower rate of corporation tax.
An HMRC spokesman welcomed the agreement.
“The successful conclusion of HMRC inquiries has secured a substantial result, which means that Google will pay the full tax due in law on profits that belong in the UK,” the spokesman said.
Multinational companies must pay the tax that is due and we do not accept less.
Finance minister claims victory
Britain’s finance minister George Osborne has vowed to close tax loopholes and introduce a so-called “Google tax” – the diverted profits tax – to stop firms moving profits abroad.
The opposition Labour Party’s finance spokesman John McDonnell said Google’s deal was “derisory”.
“This is relatively trivial in comparison with what should have been paid,” he told BBC radio.
Meg Hillier, who chairs parliament’s public accounts scrutiny committee, said international companies had been “running rings around tax officials”.
She said HMRC was “effectively admitting it pulled in too little tax from Google for 9 out of 10 years”.
Google is among several top technology firms under pressure over complex tax arrangements.
Apple agreed to pay Italy €318 million to settle a tax dispute last month, and in November world leaders of the Group of 20 top economies vowed to clamp down on schemes by multinationals to minimise tax.
The plan would force multinationals to pay tax in the country where their main business activity is based.
The OECD group of rich nations has estimated that national governments lose €90 – €210 billion, or 4 to 10% of global tax revenues, every year due to the tax-minimising schemes of multinationals.
To embed this post, copy the code below on your site
Pitiful amounts for such gigantic companies. Public services could desperately do with a fraction of what they are not paying. I feel like some future generations will look back and think we were all collectively insane.
This is very worrying, we our so dependent on these multinationals that the whole thing could fall like a house of cards in a day. I have zero trust in the sustainability of our economy right now
Sure the irish people dont mind if we dont tax the big corporations we like them to come to Ireland and pay nothing its a great little country to do business in !!!!!!!!!!!
Bobby great little country for multinationals but God help you if things go wrong as an individual in business. Thankfully bankruptcy id gradually changing but they left it to the last minute so the banks could shake down the majority of people that needed to avail of it.
I think its crazy that we only have 4 1/2 million people in Ireland and somehow we are unable to run this country .We hav to stop exporting our young people.I was watching this today and i found it really interesting its a new group of people offering something different https://www.youtube.com/watch?v=wyCmHhLGHZ0
These companies are just tax lodgers, some day soon they will all leave en masse
The bigger story is, we just lost the tax revenue from a multinational company and also there is now a suggestion that they may be better just moving to the UK. This is the constant risk in pushing these large companies to pay more taxes. As they say “biting our nose to spite our face”. Will Apple, Yahoo, PayPal and the rest follow?
wouldn’t surprise me now though if this signals the end of recruiting for Google here and eventual laying off of hundreds of staff to move to their tax base in the UK.
we’ll be exporting even more of our talent then!
Corporate tax rate is not the sole determining factor for these US multinationals in deciding whether to locate in Ireland or elsewhere in Europe.
Ireland ticks all boxes for large scale FDI; great climate, political stability, agreeable and cheerful enough people, multicultural and orderly society, only English speaking country within eurozone, highly educated workforce, excellent infrastructure, world class educational system, one of the four corners of the world and main gateway to mainland Europe from West, not too congested a country and hence plenty of space for future expansion.
They might initially come for low CT rates but they’re likely to stay for the long term in light of the aforementioned!
In any event, moves are afoot internationally to level CT arrangement playing field for these US multinationals, which could result in less wriggle room in tricking around with levels of IP / Royalty charges and shifting large chunks of profit to tax havens, ultimately leading to Ireland actually recovering its 12.5% rate, which would result in hundreds of millions annually flowing into the national coffers.
Ireland has lots to offer any new FDI entity and new Government needs to strictly implement current 12.5% CT rate without strings attached.
Hold on a minute Rory, getting a bit carried away aren’t we, a multicultural society, excellent infrastructure and a world class educational system not too sure that too many people would agree with you on all those??
Interesting , I wonder are they going to start looking at their own internal arrangements with their finance industry located in London and the cosy ‘tax compliant’ deals between London isle of man , jersey , Guernsey and its domains in the Caribbean. But sure wouldn’t that be looking closer to home too much at London……
That process to close loopholes in Isle of Man, Jersey and Guernsey were begun in 2009 after the financial crisis, after certain loopholes were closed in 2012-2013, some companies who were based on the islands shifted operations to Denmark to save/evade tax.
It’s like a cartoon of Dastardly and Muttley trying to ‘Catch the Pigeon’.
In all seriousness this works out at a little over £13,000,000 per year, still an absolute drop in the ocean as to the taxes they should be paying in the UK.
Yes, Google probably makes that much per day
I take it you have detailed knowledge of their UK specific advertising revenue and costs, and in depth knowledge of the UK’s corporation tax system, then.
@Colm They declared ‘profit margins and sales’ of 4.5Billion in 2014 in the UK. You don’t need to be a Tax scientist to work it out.
Im waiting on the bigger blow from France, however they reckon Google owes them a billion Euro.
Colm – having worked in UK as a lawyer for a number of years I would imagine I know more than you about UK business, but as Meanderings has shown you, it is not difficult to find this stuff out before you embarrass yourself.
Don’t really feel embarrassed to be honest, as an accountant I feel well placed to discuss tax. In my experience, Solicitors however, to give your profession it’s correct term, are not. There’s an underlying ignorance in assuming that high Revenues equate to proportionately high tax charges, where tax codes often exempt and reclassify parts of it. I was merely pointing that out, feel free to gather your toys up off the floor
Colm – toys, unlikely I will find a calculator amongst yours. I worked in the Corporate World in London for Clifford Chance where we were known as Lawyers. If anything you are consistent. You should be embarrassed, clueless.
At least the UK Government are fighting to get the taxes paid unlike our crowd in Ireland who don’t want to take the taxes from Apple but take it from the lowest paid in this country
Ireland aren’t fighting it because Ireland are facilitating it, Large corporations are in Ireland because of the tax benefits, the company can make big profits in larger countries and than funnel it through Ireland and pay barely any Tax, the irish economy can ‘scrape the cream off the top’.
We take very little tax from the lowest paid. We hit the middle very hard as there’s not enough of the wealthy resident here to make much of a difference.
Can i just say – my predictions are coming true, once one country does it, every country will do it. I didnt expect this to happen so soon, but apple,google etc will have hefty tax bills this year across the world. What the journal is failing to investigate, is the impact this might have on Ireland. Because if ‘tax on diverted profits’ becomes common across the world, then the benefits ireland is offering are no longer the same.
Exactly- it is not our 12.5% rate that attracts these companies- it is that they then only pay an infinitesimal proportion of that rate. Because our govt prides having them here, over fairness in having all businesses- small as well as big, domestic and foreign- paying the same rates
What is the Journal supposed to do about the inevitable consequences? Conduct another poll?
How much do they pay in Ireland then-their official headquarters.?
Still F-all.?
Probably less than they currently pay. If they were paying tax on Profits made in Ireland.
Don’t worry, it’s not like our government has placed too much emphasis on corporation tax receipts from these multinationals…
Pay your full tax like everybody should google.
Hypocrites.
Corporate tax rates across Europe should be the same for each country. Ireland may lose out in the short term but the EU including Ireland would benefit in the long run.
It is not the rate that’s the problem – it’s our systems which allow corporations to race countries to the bottom on tax collection
Never thought I’d say it….but kudos to George Osborne on this.
What is their corporate motto?
‘Don’t be evil’
It’s sometimes misrepresented as ‘do no evil’.
Whatever way you look at it they’re a bunch of hypocrites.
Apple has to €318 million back to Italy.
http://www.bbc.com/news/world-europe-35197547
In a fair world multinationals and private individuals in the top 1% would pay their fair share but sadly we don’t live in a fair world.The greatest facilitator of this unfairness (and money laundering) is the City of London and its offshore branches.Just don’t expect empty-suited Tory twerps like Cameron or Osborne to address this,rather they are instructed to stick their snouts in the affairs of others.After noises made about our tax arrangement by this pair in recent years,I can’t help but feel there is something of a shakedown going on here,less for the money and more to destabilise our arrangement.
Maybe because they are better at unraveling these companies immoral, even if not illegal, tax affairs and their ability to avoid paying fair shares of tax – better than Ireland anyway
Yeah right,dear old Blighty is addressing this issue for moral reasons.
Just don’t expect chancers like Cameron pushing to unravel the immoral and quite often illegal shenanigans in the City.They need to be seen to do something I suppose,and Ireland has always been a handy scapegoat for them.Not to mention the fact that they would like to relieve of us of the business,which I suspect is the long con.
Italian Parliament SCRAPS LPT (Local Property Tax) on Family Homes – Dec 2015. Ulrika Lomas, Tax-News.com, Brussels. http://www.tax-news.com/news/Italian_Parliament_Passes_2016_Budget____70028.html
(Fine Gael, Labour, Fianna Fail, Renua ….. WRONG ANSWER!)
Britain the last to talk…..they keep the Cayman Islands gong….biggest tax evasive spot n the planet….
What we really want to do is end the “Brass plate” companies who channel profits through Ireland, companies who actually have operations and staff here won’t just up sticks and move because we ask them to pay some tax!
Get rid of the shell companies and improve our image with the world! We’re not the Cayman Islands!!
We need to fund public services and pay back the bank debts imposed on the ordinary taxpayers of Ireland!
Frugal Google.
Don’t they know we some Irish people speak Irish. We invest heavily in Irish to attract Google, Apple, Intel, etc Oh maybe they want good English speakers in the EU.
What are you waffling on about Mindfulirish??
same goes for british business’s operating in ireland most don’t pay in ireland, any tax paid by irish sky subscribers goes to the british inland revenue
Sure Ireland is benefiting from the ridiculously low corporation tax rate we offer multinationals but its at the expense of the lower to middle class not just in Ireland but across the EU. These companies need to start contributing their fair share to the services they gain from this country. There should be a standardised method of calculating corporate tax across the EU and then tax incentives for large corporations should be given to the poorest countries. Ireland has also become too reliant on multinationals attracted here due to low tax and we need to develop our own country and companies to be more competitive on the international market.
You need to look at the income taxes their employes pay.
have your say