Google tax is not cheating tax on revenue
Most of us view the web via Google. The company makes huge amounts of money for showing adverts to internet users. But should it pay more tax? The Daily Mail says Google paid “just” £36.4million in UK corporation tax last year. This sounds like a lot of money. But the Mail’s says it’s not a lot when you see the figure in light of Google’s “£1billion in revenues” – i.e. turnover.
A politician is outraged. Liberal Democrat Treasury spokesman Susan Kramer thunders: “It is appalling that Google are still getting away with paying such a paltry amount of their total revenue back in taxes.”
Er, no. Revenues are not the same thing as profits. You’d think a leading politician would now that.
The Government describes Corporation Tax as a 20% on profit. Google made a pre-tax profit of £149m in the UK for the 12 months to the end of June 2016.
But accounts filed by Alphabet, Google’s parent company, show UK sales of almost £7bn. But Google’s UK sales are booked in the Irish Republic, where corporation tax is 12.5%. Ireland boasts of its favourable rates. The Republic of Ireland’s IDA seeks to secure inward investment. It produces this handy guide to its corporate tax rates:
Such are the facts.