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Business News/ Industry / Infotech/  Google denies misleading parliament over UK tax liabilities
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Google denies misleading parliament over UK tax liabilities

Google says it stood by November testimony that the company pays taxes where it creates economic value

Since 2010, Google has avoided about $6 billion in income taxes around the world by shifting billions in royalties through a subsidiary in the Netherlands and then into a Bermuda shell company, according to company filings in the US and offshore. Photo: Bloomberg (Bloomberg)Premium
Since 2010, Google has avoided about $6 billion in income taxes around the world by shifting billions in royalties through a subsidiary in the Netherlands and then into a Bermuda shell company, according to company filings in the US and offshore. Photo: Bloomberg
(Bloomberg)

London: A Google Inc. executive told British lawmakers that the California-based company didn’t mislead Parliament over its tax obligations in the UK.

Matt Brittin, vice president for sales and operations in northern and central Europe for the world’s most popular Internet search engine, said he stood by November testimony that the company pays taxes where it creates economic value. Lawmakers on Thursday tried to establish whether the company was closing sales in the UK, making it liable for more tax.

Nobody in the UK has had an opportunity to close a transaction with a customer, Brittin told the cross-party Public Accounts Committee. I stand by what I have said.

At stake is an attempt by lawmakers to get Google to pay corporation tax in the UK by establishing whether the company is selling its services in the UK. Google says that it’s UK- based employees aren’t closing sales as that is done by the software, which has its international intellectual property based in Ireland.

Chairwoman Margaret Hodge, a member of the opposition Labour Party, told Brittin that he would stand in contempt of Parliament if he misled the committee. She pressed him on details obtained with former Google employees that showed sales are being executed in the UK.

If sales activity is taking place in the UK you are misleading Parliament and the tax authorities in suggesting that is not happening, Hodge said.

Why don’t you call a spade a spade? asked Richard Bacon, a Conservative lawmaker.

UK grilling

In November, the committee grilled executives from Google, Starbucks Corp. and Amazon.com Inc. over their methods for avoiding UK taxes by pushing profits offshore. As first reported by Bloomberg in 2010, Google uses a pair of tax-shelter strategies known as the Double Irish and Dutch Sandwich to avoid taxes around the world.

Since 2010, Google has avoided about $6 billion in income taxes around the world by shifting billions in royalties through a subsidiary in the Netherlands and then into a Bermuda shell company, according to company filings in the US and offshore.

The strategy has helped cut the company’s worldwide tax rate roughly in half, to 19.4% in 2012, compared with the combined US federal and typical state income tax rate of 39.2%. The profits it said it derived overseas, Google reported a tax rate of just 5.3% in 2012, according to its annual report.

In the UK, the company’s subsidiary reports similarly low taxes. The company reported nearly $4.1 billion in sales in the UK in 2011, according to Google’s annual report. But its UK subsidiary reported paying taxes of £6 million.

Google avoided about $2 billion in worldwide income taxes in 2011 by shifting $9.8 billion in revenues into a Bermuda shell company, almost double the total from three years before, filings show. BLOOMBERG

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Published: 16 May 2013, 06:20 PM IST
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