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More on Google’s tax bill

August 14th, 2012 by

Some members have asked how much tax Google would pay if it weren’t dodging it. But because of the way the company is set up, and how it seems to handle its finances, it’s not always easy to say.

Richard Murphy from the Tax Justice Network has previously commented on the way Google appears to chanel revenue through Ireland and the Bahamas. By sending money offshore Google’s revenue and profit here in the UK falls. That seems to be part of the reason Google recorded a loss in the UK last year.

Murphy’s latest calculations suggest that the £6m in tax Google did pay is a long way from the amount of tax that would be due if Google choose not to use this tax-dodging setup. His estimate is that £218m is “missing”.

Posted in 38 Degrees Blog Posts, Tax dodging

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  • http://twitter.com/blue_burmese blueburmese

    You’re still not getting it are you? Your petition was based on the Google UK Ltd results. Google UK provide marketing and R&D services to Google Ireland Ltd and Google Inc., that is to say that their only two customers are other Google group companies. The value of these services, or what the company turned over was £395,757,534. To provide these services, Google UK incurred the following expenses in 2011:

    Advertising and promotional expense – £105,474,648
    Professional services – £9,815,144
    Auditor’s remuneration – £55,000
    Stock based compensation expense – £51,457,135
    Depreciation and amortisation expense – £5,748,424
    Employee benefit expense – £190,644,447
    Other administrative expenses – £53,667,487

    Total – £416,862,285

    Quite simply, the company made a loss because its expenses were greater than its income. Substantial expenses relate to employee costs (employee benefit and stock compensation), which is probably a good thing, keeping people gainfully employed. There is no suggestion that Google UK is sending money offshore, quite the opposite in fact noting that its revenues (i.e. the flow of income into the UK) come from Ireland and the US.

    I was also amused at the the following on the petition page – ”
    Originally this petition was published using mistaken information from The Telegraph.” Kind of invalidates the whole thing really.

  • Shorny

    All it takes is one person to scream “Fraud” or “Rape” or whatever, and
    it provokes a reaction that everyone easily gets whipped up to comment
    and act on, regardless of the fact that none of the facts have been shown to be fully verified!

    38 degree’s, you have a moral responsibility to research and validate
    what you send out to millions of people. Don’t be a puppet tool of the
    protagonist’s… Please learn from these mistakes.

  • http://www.facebook.com/renato.rodrigues.353803 Renato Rodrigues

    This is all so shady and complex that 38degrees should be careful… In reaction maybe google can pay some more tax in the UK by avoiding it somewhere else. We need to tackle tax havens, many of which are British Crown dependencies

  • http://www.facebook.com/renato.rodrigues.353803 Renato Rodrigues
  • Colin Gregg

    Mmmm!

    I have to agree with my previous commenters: getting wound up about “tax-dodging” because a few multi-nationals have paid very little Corporation Tax may be “grist to the headline-writers’ mill” but 38 Degrees needs to take a more in-depth view.

    These companies have not broken the law. Shareholders employ their CEOs and CFOs to maximise profits and – by definition – minimise expenses they can legitimately avoid. The (ridiculously complex) tax system has been established by successive governments and these companies are in a position to take a considered view on where in the world is best to locate and do business…..and where to pay the extra layer of tax demanded of them.

    Ultimately, “companies” don’t pay taxes – people do! Either the potential employees (in the form of fewer jobs), the shareholders (in lower dividends, making finding investment funding harder), the customers (in the form of higher prices) or the country as a whole (in the form of higher unemployment and greater welfare spending), if the firms re-locate to lower-taxed countries.

    They already pay other taxes, rates, rent etc. and employ 000′s of people who, in turn, pay their taxes, spend in their local shops and community services, all of which benefits our government and wider society.

    If the tax-take is deemed insufficient then it is the government’s fault, not the companies. Change (even simplify!) the tax system to make what taxes are imposed easy to collect and difficult and expensive to avoid.

    Responding to headlines merely bashing the companies which are behaving totally rationally (and legally!) does neither our politicians nor 38 Degrees any credit at all.

  • Andrew Payne

    Ah yes but this issue shows no sign of going away (on Sunday 19th May 2013) as there’s now increasing evidence as aired on the BBC News tonight at 10pm that Google are up to shady practices to enable them to dodge tax and they’ve been caught being economical with the truth to the Public Accounts Committee of the British parliament – very naughty people. This is going to come back to haunt Google big time unless they seriously consider mending their ways. The British public stand up for fairness and do not appreciate big companies that hold this in contempt and think they are too special to pay tax at the level appropriate.

  • Anonymous

    It may be legally allowable for companies to dodge paying their share of tax, but we ordinary mortals have no such choice. We’d all love to tuck our pay into a bank in Bermuda or some other “haven”, but we’re not allowed to do so. So why should “Do No Evil” Google or any other multi-national be allowed to do so?

    No-one is asking them to pay more than we the locals do – if they make profits in the UK, they pay UK tax. If those profits are earned in Tuvalu, then they pay Tuvalu rate of tax. Taxes pay for schools, firefighters, the police and military, hospitals, etc. If Google takes those profits away from (say) the UK, then you and I end up paying more from our pittance, while millionaire Google shareholders sit back and (legally) relax.

    And remember, those profits came from UK companies being charged to advertise via Google. Those businesses add those expenses to the cost of the goods they sell to us. So you and I are paying twice over for Google’s greed.