Anorak News | Whatever The Mail Says Google Just Isn’t Avoiding UK Tax

Whatever The Mail Says Google Just Isn’t Avoiding UK Tax

by | 25th, July 2014

Google’s UK accounts have been filed and thus, as sure as eggs is eggs, we’ve got the Waily Mail chuntering on about how appalling it is that the company is dodging all of this tax. Except the truth is that Google simply isn’t dodging, not avoiding and most certainly not evading, tax in the UK. It’s doing exactly what the law in general says it may do, what European law actually encourages it to do:

Google is facing fresh outrage over its meagre contribution to the UK taxman, after revealing it paid just £20million in corporation tax last year.

The California-based internet giant has faced stinging criticism for using a complex corporate structure that allows it to route UK sales through Ireland to slash its tax bill.

And the scheme appears to have again paid off.

Last night it revealed in accounts filed to Companies House that it paid £20.4million in taxes last year – despite admitting earlier this year that it pulls in £3.3billion of revenues in Britain, largely from advertising.

But in accounts filed last night Google UK said it made a profit of £70.8million before tax on sales of £642million.

But it doesn’t “route” those sales through Ireland: it actually makes those sales from Ireland. Which is exactly what this whole Single Market malarkey is all about. The EU wants corporations to treat the EU as that one single market: this means that they are not just allowed but encouraged to sell to all 29 countries from one single base in just one of them. Which is exactly what Google does. And as to whether this is tax avoidance, here is our own dear HMRC on the subject:

Non-resident trading companies which do not have a branch in the UK, but have UK customers, will therefore pay tax on the profits arising from those customers in the country where the company is resident, according to the tax law in that country. The profits will not be taxed in the UK. This is not tax avoidance: it is simply the way that corporation tax works.

Most major economies operate corporation tax in the same way as the UK, so UK-resident companies are treated in a similar way in other countries. In other words, UK companies do not pay corporation tax to another country on the profits from sales in that country, unless they trade through a branch based there. Instead, they pay corporation tax in the UK.

Note that: the bleedin’ taxman says it isn’t tax avoidance. So, therefore, it ain’t tax avoidance, is it?

Posted: 25th, July 2014 | In: Money Comment | TrackBack | Permalink