Tech giants in tax scandal

Google's secret deal with the taxman has landed HMRC in hot water.

16-1-28-Google-634

Google's tax deal has provoked scepticism

Last weekend Chancellor George Osborne hailed a new tax deal between Britain and Google as "a major success". By mid-week he had had to downgrade the arrangement, which will see the tech giant pay £130m in back taxes calculated over ten years, to a "positive step".

The apparently generous settlement, which will see Google pay around £30m a year rather than the £20m it owed before, provoked widespread scepticism. It hardly helped that Italy, a much smaller market, appeared to wring more money out of Google in its own back-tax deal, or that Facebook made clear it was resisting UK efforts to reclaim taxes from it. Facebook paid £4,327 of corporation tax last year.

What the commentators said

The crux of the deal, continued Kelner, seems to have been Google's successful argument that it has no "permanent establishment" in Britain, despite the £1bn headquarters it is building in London. This is not so much a loophole as "a socking great breach" the government encourages corporate giants "to drive a coach and horses" through.

The deal was also struck "wholly untransparently", said the FT. HMRC hasn't said what basis the liability is being calculated on, or justified the new rate it has come up with. Secret deals "only deepen public disquiet", added Jonathan Guthrie in the same paper. "What weird discount might HMRC apply to Facebook's liabilities, one wonders?" One based on how many "likes" CEO Mark Zuckerberg's daughter's pictures have triggered? In any case, with Google having agreed on just £130m, Zuckerberg "will hardly be quaking in his Adidas sandals".

In the end, these multinationals are not going to pay taxes out of charity, said Matt Warman on Spectator.co.uk, no matter how much some politicians whinge about it. The only way to get them to pay a fair level of tax is international co-operation to tighten rules and close loopholes. It's hard to fit big internet firms into "territorial tax systems", said the FT, given their ability to shift intellectual property and money around the world. "But that is no excuse not to try."

Recommended

High house prices are bad news for us all
House prices

High house prices are bad news for us all

UK house prices are rising at their fastest rate in 15 years. John Stepek breaks down why.
7 Dec 2021
Why Britain should join the race to corner the cannabis market
UK Economy

Why Britain should join the race to corner the cannabis market

Germany’s government is to legalise cannabis – but Britain risks getting left behind in a growing new industry, says Matthew Lynn.
5 Dec 2021
How should we go about “levelling up” Britain?
UK Economy

How should we go about “levelling up” Britain?

“Levelling up”, long a mantra of Boris Johnson’s government, now has a minister and a department in charge of delivering it. But will they succeed?
4 Dec 2021
Forget socialism – shareholder capitalism is delivering
Economy

Forget socialism – shareholder capitalism is delivering

Many Millennials say they would prefer to live in a socialist society. That's understandable. But while socialism promises everyone ownership and powe…
3 Dec 2021

Most Popular

Three safe bets on the growing online gambling sector
Share tips

Three safe bets on the growing online gambling sector

Professional investor Aaron Fischer, creator of the Fischer Sports Betting and iGaming ETF, picks three of his favourite online gambling stocks.
29 Nov 2021
Making sense of the new minimum pension age rules
Pensions

Making sense of the new minimum pension age rules

The rules surrounding the minimum age at which you can start tapping into your retirement savings have been tweaked, but are still confusing. David Pr…
23 Nov 2021
Bubbles grow in global property markets as house prices continue to rise
Property

Bubbles grow in global property markets as house prices continue to rise

House prices grew by 6% in the year to mid-2021 in 25 global cities, with the German property market in particular showing signs of overheating.
3 Dec 2021