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MP Threatens Google With A Grilling Over Tax

Peter Judge has been involved with tech B2B publishing in the UK for many years, working at Ziff-Davis, ZDNet, IDG and Reed. His main interests are networking security, mobility and cloud

“Immoral” tax avoidance could face searching questions, warns John Mann MP

A Labour MP has threatened Google with a grilling over its tax avoidance before the Treasury Select Committee, although the search giant maintains its tiny tax payment in the UK is perfectly legal.

“I think it would be highly appropriate to pull a Google executive in front of the Committee to justify their failure to pay proper taxes,” said John Mann, MP for Bassetlaw, after it emerged last week that in the UK the  Google tax bill was only £6 million  on revenues of £395 million in this country.

Searching questions on Google Tax

Senior Google executives could be called in before Easter, Mann told The Independent, describing Google’s British tax arrangements as “entirely immoral”, even though Google maintains it uses a completely legal mechanism to reduce its tax liability in this country.

The Google tax avoidance tactic is to operate its UK business as an agent for its business in Ireland, so it is only liable for UK tax on a ten percent commission on its revenue.

From Ireland, Google revenues are funnelled to Bermuda as a licensing fee to its division there, so most of its turnover goes through the tax haven, a legal process to which Mann objects. Because Bermuda is a British dependency, which Britain provides with defence, British tax payers are in effect “paying twice because we are paying for Bermuda,” he said.

Mr Mann was not available to expand on his views, but Google chairman Eric Schmidt has previously said his hands are tied, as the scheme is legal. Google is bound to seek out the best deal, and to pay more tax voluntarily would most likely not be approved by Google shareholders.

Meanwhile, Internet retail giant Amazon faces an investigation by HM Revenue and Customs after paying no  corporation tax on its £3.3 billion UK sales in 2011.

HMRC, which has been using web robots to find tax cheats, recently launched an app to help people understand their taxes and where their money is spent, but it crashed just one day after its launch.

“We comply with all the tax rules in the UK,” a Google spokesperson told TechWeekEurope. “We make a big contribution to the UK economy by employing over a thousand people, helping hundreds of thousands of businesses to grow online and investing millions supporting new tech businesses in East London.”

An online petition protesting Google’s tax avoidance has reached 45000 signatures out of a target of 50,000.

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