Google: Thanks for the billions in revenue, UK. Here are your taxes, that's ... £11m Google paid Britain £11.2m in corporation tax in 2012, the company confirmed today. That's slightly more than the £7.3m the ad giant coughed up in 2011. But the latest figure, confirmed by Google to The Register this afternoon, will no doubt enrage the search king's critics - including Labour MP and Parliament's Public …
It is simple, drop taxes to 5%,
Google made about 38% profit (£12.95bn revenue, with £4.95bn profit), so 38% of their UK revenue of £3bn according to this article, means £1.14bn profit, at 5% thats £57Million, 5 times the tax paid already...
Surely it is better to give them an incentive to pay taxes at a low rate, than fight them, since fighting will just mean costs go up.. Google will spend millions fighting any higher taxes.....
Dropping corporation tax would benefit everyone in the long run, more jobs as corporations move to take advantage of it, small & medium businesses have more money to invest in growing and less money spent on lawyers to try and cut their tax bill...
But remember that on £3bn revenue, that equates to 300Million in VAT if they were all VATable transactions...
Good grief Team Register, you need to chat to your Tim "There's a great deal less tax evasion going on than the current zeitgeist might lead you to think" Worstall. As he'll tell you
(a) companies can't actually get away with not paying these taxes, and if they do that's actually fine as they're allowed to and - Lordy - what else are they supposed to do, and
(b) it doesn't actually happen anyway - or at least not nearly as much as we think, hardly at all, almost negligible - and anyway refer to (a)....
Is your sarcasm detector broken or something? I was agreeing with him.
Calling him a prole is a way to reference his/my/our increasingly proletariat role in society. We are not members of the inner party nor even members of the outer party. Our job is to "shut up, prole" and like it.
Seriously, you would think that of all readerships I shouldn't have to explain that here. *sigh*
My faith in the readers is really collapsing of late.
This is a prime example why more people should pick up the phone and stop firing off emails willy-nilly during the business day. Most of us are not linguists so while we may have a little voice in our heads with the intended inflection for our missive we cannot get it down on paper as we don't have time or skill to set it into context. The only alternative is to state the bleedin' obvious with the classic pseudo HTML/XML sarcasm tags. If not we end up with lots of emails flying back and forth while the original meaning is hammered out, all the time a 30 second phone call would have cleared it up immediately.
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It's not evasion, it's avoidance.
The latter is completely legal, and lets face it, what we would all do given half the chance.
All they've done is followed the rules HM Gov set out. They've just got a good accountant. You wouldn't seriously expect them to ignore the good accountant and get a shit one that makes them pay more than they legally have to would you?
I'm sure there is some far more criminal tax dodging going on by members of the house.
VAT is paid by consumers, not businesses. It's a sales tax.
These large multinationals need to be taxed on the profits they make instead of being permitted to hive them off into tax havens with fake accounting practices. They are literally siphoning money out of our economies with impunity. To make it worse, our UK government further aids their profitability by topping up low wages with tax credits and housing benefits. I advocate at least sending large corporations invoices for tax credits paid to their employees simply in order to make ends meet. Either that, or put the minimum wage up to £15-20 per hour or something.
Most businesses expect to make too much profit. We're in a recession, but they continue to make high margins by raising prices and freezing wages. In their actions, they prolong the recession and compound the misery for anyone earning a living.
The company has previously defended its tax arrangements in the UK by claiming that it helps the British economy by hiring staff here, who in turn pay taxes to the government.
When I spend money at the shops I also help the British economy by paying VAT and providing employment for checkout staff, so maybe I shouldn't have to pay income tax either.
Well unfortunately I can't agree with that one, VAT while a large cost is only 17% of receipts... but that is still double that of corporation tax receipts...
So in reality corporations only pay 7% of tax in the UK....
Surely dropping corporation tax to 5% or similar could actually increase revenue as corporations keep their money here instead of moving it away?
the key thing is to ensure that VAT is paid on all the purchases made from google & the like!
Yet again, we have a big international corporation steadfastly following the letter of the law. To be fair I'm guilty of doing exactly the same myself most of the time. But Google (and Apple, eBay, Amazon, Starbucks, etc etc) shouldn't be allowed to get away with it!
If this continues unchecked, at some point a government might have to earn its keep by either changing the law, or by changing the tax rates to make us competitive. But should we really have to expect our governments to do their job, when it's much easier to expect our corporations not to do theirs?
They do change the law, as quickly as they can and they have made our taxes more competitive, to the point of taking the piss out of most of the rest of the EU in my opinion. The trouble is that most of the tax laws (ab)used in these tax avoidance schemes are required for international trade to function and free trade within the EU is a condition of entry.
"Yet again, we have a big international corporation steadfastly following the letter of the law."
Not so. In fact what they are doing is illegal, and not just in a vague "oh, well, I suppose you could look at it that way" sort of way. There are specific laws against using fake transactions to move revenue out of the tax regime of the UK, and they do get imposed from time to time, depending on whether the head of HMRC has been taken to the required number of lunches or not.
If you "minimise your taxes" by paying your wife for the use of your house and work from home, so that you have no official surplus, then you will be up before the beak toot-sweet. This is the basic idea behind Google and Amazon's scheme - payments which exist only for the purposes of making the payments, to companies whose sole reason for existence is to accept those payments which the paying company in reality get's the full value of since, duh, it's the same company.
All totally illegal, and clearly so.
If that is illegal, then why aren't they getting in trouble with the UK government? You're basically saying that lawbreaking is being ignored. Or, more likely, what they are doing is legal, and you're just unhappy that the law doesn't say what you think it should.
The latter is the case for a lot of laws dealing with corporations, but wishing something were the law doesn't make it so. Legislators do. Good luck getting them to change the law, I guess they're worried that Google will quit doing any business in the UK and they'll lose even that measly 11.2 million.
But if you divorced your wife
and
she lives in a different country
and
she is charging you rent to stay in HER house (the one the courts gave her despite you having paid for it)
then she would be quite entitled to declare the income as a seperate entity; and you would be quite entitled to say you are paying rent
and if you could work out a tax/business case for claiming said rent as a business expense
well you'd be home and dry
@Robert: "All totally illegal, and clearly so"
You speak with the certainty of someone who knows the law inside out, but without reference to the acts in question, which makes me suspicious.
If they are breaking the law, and if (as you say) HMRC have decided not to go after them, then there are plenty of other organisations (press amongst them) that will do the investigation and make the results public.
I believe that a lot of people want this to be true, almost certainly enough people to vote for a government to make it so. Governments (of all flavours) are either incompetent or complicit - I suspect the latter.
The bottom line is that generally speaking these large corporations *are* paying tax on their profits. They're just being selective about where they pay them, and taking corporate profits makes this possible.
IMHO, taxing activities taking place in the country (employment, sales, etc) is the simplest way to ensure that tax lands where it "should".
> IMHO, taxing activities taking place in the country (employment, sales, etc) is the simplest way to ensure that tax lands where it "should".
Well they do, and it's called "sales tax" or VAT for the uninitiated.
This issue is entirely different and it is a tax on companies doing business.
Google is operating in Ireland so they are taxed on that basis.
It's one of the big problems with having a global economy but local governments with their own separate laws. They are fundamentally incompatible.
UK Government does have a history of not perusing full payment of illegal tax evasion by large companies. Vodafone were let off paying only a fraction of what they owed after they breached tax rules following the purchase of a German Engineering firm. The British press in the same case showed they were not too bothered in reporting either the tax evasion nor the HMRC's lack of efforts in pursue payment. This maybe because the owners of certain British Newspapers are also involved in tax avoidance which may or may not be legal (The Barclay Brothers prop. Daily Telegraph and The Spectator, GMG owners of The Guardian, Northern Shell owners of The Daily Express and a few porno mags and channels.).
I have no idea whether the Google's tax arrangements are legal or not. But I wouldn't suggest judging it just on the actions of HMRC and the reporting of newspapers.
"paying your wife for the use of your house and work from home"
huh? don't quite get your point here...
but it does bring up an issue I have with our government, they promote family life yet piss on single home earners...
Why can't they just introduce a joint tax allowance for married couples??
I don't get why if person A in a marriage earns £100K and person B earns £0 it should be any different if person A and person B both earn £50k each... but it is...
Margaret Hodge and others can foam at the mouth and bite the carpet, but this is simply what multinational companies do. The only ways to get a multinational to pay more tax in Britain are:
(a) charge a low enough tax rate to undercut other economies
(b) offer advantages that make it worth paying a comparatively high rate of corporation tax.
The problem with (a) is that everybody pays the lower rate, so the tax take goes down by more than the extra you get from the multinational. The problem with (b) is that it's difficult to devise benefits for a multinational like Google whose business has no real location.
There is the inherent advantage that they are making £5bn from us. Google can't be scared away from that by making them pay the proper tax. What is required is for the government to get some balls and get the laws in place to enforce it rather than penny pinching benefits from the disabled.
"What is required is for the government to get some balls and get the laws in place to enforce it rather than penny pinching benefits from the disabled."
Actually it needs to do both. We spend about £13 billion a year of disability benefits, which in GDP terms is twice the OECD average, and reflects fifteen years of Nulab using "disability" as a cover for unemployment, so that we've now got over 3m people claiming disability benefits.
Round here' it's bleeding obvious that nothing like 1 in 20 people is sufficiently disabled to need to claim disability benefits, so I can only conclude there must be entire towns of disabled located up north, or somewhere else remote. Unless self inflicted morbid obesity counts as a disability.
b) where does your 1 in 20 figure come from because that is completely incorrect?
Good thing you're AC, because your claim that I'm incorrect is utter shite. DWP figures show that there were 3.3 million claimants for disability living allowance, ONS data shows UK population 63.7 million. Using the magic of mathematics, anybody other than a retard will see that my statement is correct, indeed, if anything I was erring on the side of caution. If you weren't such a tit you'd have been able to check this for yourself on the internet. Possibly you're getting on your high horse over the total number of disabled in the population, which isn't anything to do with the point I was making.
a) Does it occur to you that they might be housebound so you won't see them milling about on the street?
What leads you to believe that I'm basing my judgement on random observation of people in the street?
c) what basis do you have that any significant proportion are not truely disabled?"
I didn't say they were (although I did infer it, I agree). The fact is that we have an outlier rate of disability claimants of working age compared to all comparable developed economies, yet we don't have any particular circumstances that might cause or explain high levels of disability. We have a large population and most of us don't marry our cousins, so there's no exceptional birth or genetic defect rates. Our roads are amongst the safest in the world, so no excess levels of road casualties. And we have offshored almost all heavy industry, and the accidents that go with it, and we have an active and effective health and safety culture for the bit that remains. You could suggest that our wars have increased the number of disabled, but sadly the out of control handout culture that started this mess now means that the clowns of ATOS try and control new claimant numbers by turning down servicemen who are genuinely disabled as a result of our various wars, and even if we correct for that it doesn't materially alter the basic numbers.
The £13 billion is for what was called disability living allowance. It is incapacity benefit, at a cost of £5bn that is paid to those who are unemployed due to disability (or other physical/mental problems) and so this amount that if anything that would be used to cover unemployment.
The living allowance covers the cost of mobility and care for disabled people. Considering that a mobility allowance is paid to those who are blind and that there are 2 million blind people in the UK, it is quite conceivable that 1 in 20 may need to claim some form of disability benefit.
well, no, there is also
(c) change the tax law so that corporations can no longer legally export their profits. It's WAAAY beyond my pay grade to come up with a detailed solution* , but doesn't need to be complicated**.
1) Introduce an EU-wide mandatory company ownership registry so that the ownership of all EU-registered companies is public (or at least known to tax and law enforcement authorities). Any non-EU company can voluntarily submit it's ownership information to the registry. Ownership needs to be disclosed up to the ultimate owner, no matter how many levels up it goes. Any and all payments made to companies outside the registry cannot be deductible for tax purposes. This has the advantage that it can be introduced as an anti-money-laundering measure, and hey, if the ultimate beneficial owners have nothing to hide, they have nothing to fear, right?
2) Introduce industry standard benchmarks of reasonableness on intra-company payments. For example, if the commodity market price for coffee is X, Starbucks UK can pay Starbucks Switzerland up to 120% of X for coffee. Paying 200 or 300% is tax evasion. Structure the law so it is the company claiming the deduction that has to prove to the tax authorities that the deduction is allowable. For example, for Google Bermuda to charge Google Ireland $11bn a year for IP, they need to prove that either Google Bermuda developed that IP themselves, or else that Google Bermuda paid for that IP at a fair market price relative to the 11bn a year they want to charge for it.
Yes, it will probably cost a few hundred millions to set up and administer, but it will increase tax revenues by many billions, most of which will be coming from the richest people on the planet, who have become so rich partly because teh laws they lobbied and paid for allowed them to avoid so much taxes
*hey, isn't that what politicians and civil servants are paid for?
**in fact, the simpler, the better
And I'm trying to tell HMRC have got their sums wrong in coming up with a tax underpayment of £130.
Jump on the little guy who goes to work, but make it nice and comfortable for the big boys to take the piss big time.
Oh well, at least it keeps some Welsh people doing something else rather than bothering sheep :)
We need to remind these buggers that they are elected and paid by us to manage things for us. I think all ministers should show solidarity by getting a significant pay cut and a bedroom/second/third home tax. They should pay their own transport costs and try claiming tax relief per kilometre, with full receipts. Where the family occupies state housing - e.g. 10 Downing Street, they should pay proper rent for the use of the property by the rest of the family, nannies etc. and decoration allowances should follow similar rules to those in other state housing, where the rooms are not those used for state business.
Wherever possible, all travel should be on public transport and private medical insurance is, I hope, at the cost of the minister and not the state.
I suspect such measures would do wonders for fairness to the rest of the country.
It is curious that the British government sees fit to use employees of American firms, such as Google, as advisers and consultants rather than those of British or at least EU firms and, at the same time, appears to condone the systems that permit blatant tax avoidance if not all out tax evasion.
Coat icon: looks to me as if it is a thief going through my coat for what he can get - appropriate in this case.
I know a US company that was invited to open offices and employ people in the UK, it went from a few contractors to about 60 full and part time staff and consequently it pump a lot of money and employment into the UK.
On the advice of the UK government it was set up as a marketing operation to be more tax efficient, additionally they get business help from dedicated people in the UK government which they wouldn't get as a UK business.
They did it partly because the offer from the UK government was very attractive and beat what was on offer from Ireland and Holland so it strikes me as odd that the same government is pissing and moaning in soundbites about something that not only is legal but they actually advise foreign companies to do.
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