GOOGLE WHISLEBLOWER TELLS HOW GOOGLE AVOIDS PAYING UK TAX – Corporation Tax is highly complex but when you have a Government that allows outside tax firms to effectively write tax law is it any surprise that these firms then advise their clients how to avoid paying tax on UK profits?
In 2011 Google, according to reports, generated over £3 billion in sales revenue and yet paid just £7 million in Corporation Tax.
Google argues that the sales were not made in the UK, where a tax rate of 23% is imposed, but rather in Ireland where the tax rate is less than half that levied in the UK.
A Whistleblower, Barney Jones, who worked as part of the Advertising Sales force in the UK for Google has come out and told officials that Advertising Sales are indeed made in the UK and then payment is asked for by their Irish operations; effectively making the sales look like they came from Ireland instead of the UK.
Barney Jones reports that he has over 100,000 emails that exposes Google’s ‘immoral’ tax avoidance scheme.
The system in which Google employs to avoid tax is relatively straightforward. If Barney Jones is correct then sales are firstly made in the UK but the actual billing takes place in Ireland to avoid the UK’s higher tax rate. The profits are then channeled through Bermuda, a tax haven, which then reduces its liability to the Irish Government and the UK Government.
Many UK firms, especially small firms, are astonished that Google is able to avoid paying tax this way; especially in the light that HMRC spare no expense in hounding small and medium sized enterprises to ensure that every possible penny in tax is paid over.
David Cameron will in the next G8 summit to be held next month ask world leaders to find ways to prevent multinational firm from exploiting tax loopholes.
Last week it was announced that MPs are likely to see their salaries rise from £65,000 to £75,000 and many MPs have begun justifying the raise stating that even at £75,000 this is still way below what a ‘professional’ receives while working in London. The truth is that MPs are not professionals and rarely have adequate qualifications for their positions. The creation of tax legislation itself is a clear demonstration of this fact whereby, as pointed out above, the Government employs outside expert assistance in order to create tax law.
David Cameron is due to meet with Google’s chairman, Eric Schmidt this week in the quarterly ‘Business Advisory Group’ which again clearly demonstrates the lack of ‘professionals’ in Government.
There is no doubt that Google’s tax avoidance will be brought up and little doubt that Eric Schmidt will no doubt mirror Matt Brittin’s, a vice president of Google, comments in the Public Accounts Committee (PAC) earlier last week in that sales revenue is generated in Ireland and NOT in the UK.
Whilst this is seen by all as immoral it doesn’t stop businesses from buying Google’s advertising products and doing something immoral doesn’t make it illegal. Tax avoidance is perfectly legal and company chiefs have an obligation to their shareholders to reduce costs in order to deliver higher profits and dividends. It is up to the legislators to make sure that companies like Google pay their fair share of tax. Unfortunately when you have incompetent people who lie about their level of professionalism then it is not surprise that the tax system has more holes that my granny’s doilies.
Google has grown into the most powerful company operating on the internet and in turn is now putting many small and medium sized companies out of business due to its practices of manipulating the its Search Engine results.
In 2011 the U.S Justice Department declared that it could find no evidence that Google was manipulating its search results in order to stifle the competition. This ruling was in direct conflict with the EU Commissions findings earlier this year which clearly indicated that Google was manipulating its search engine in order to push out competing companies for Google’s own services.
Duplicate content, as far as Google is concerned, is not allowed and yet two major European newspapers threatened to sue Google last years for effectively stealing their content that was then used on Google News and which ranked well above the original content.
Google has now admitted to manipulating its search results and has vowed to end the practice in order to avoid massive fines from the EU. As yet Google has not demonstrated any such action and remains to outrank many of its competitors for its own financial gain.
Last week a small website, Hometipster.com, announced that it would no longer be dictated too by Google. After 2 years of trying to comply with Google’s Guidelines it found that YouTube still consistently ranked above its original content and this is surprising when Google’s algorithms are unable to determine the content of a video.
Hometipster.com, a Home and Garden website, announced that it was turning its back on Google and while it wouldn’t prevent Google from indexing its content it would no longer spend time, effort or cash in trying to rank better. Its owners announced that the only one that should be able to judge the quality of the content should be the user and if the quality is to their liking then they will share it via their social networks and thus increase exposure.
There is little doubt in many people’s eyes that Google now controls the web through its search algorithms and its ever increasing level of online services; none of which are subjected to its own algorithms. This places Google at a manipulated competitive advantage that few can compete with consider Google has a search market share of over 95%. These unfair trade practices only helps Google to spread its influence around the globe and in return generate vast profits that are then channeled multiple times through various countries in order to avoid paying tax and there is little Government can do while it continues to employ experts that ultimately work for companies such as Google.
What do you think of Google’s tax avoidance? Have your say… leave your comments below. If you have a story on how Google has affected your online business please contact us if you would like your story published.