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GOOGLE’S CORPORATE TAX payments over a six-year period are to be investigated by the British tax authorities – in an investigation which will likely see the relationship between the British and Irish companies come under close scrutiny.
A report published by the House of Commons’ Public Accounts Committee reveals that the UK’s Revenue and Customs service (HMRC) was undertaking “a review of the tax returns filed by Google UK for 2005-11 inclusive”.
Google said the review was standard practice and that it would co-operate fully with the review.
Google’s British company, Google UK, recorded revenues of £396 million in 2011 but paid corporation tax of only £6 million because of arrangements which see Google’s international companies pay hefty licencing fees to a sister company in Bermuda, which owns its most valuable intellectual property.
The company’s Irish operations could also come under the spotlight because of the close relationship between the British company and the Irish one, Google Ireland Ltd, which oversees the company’s operations across Europe.
Google employs 1,300 staff in the UK – but told the Public Accounts Committee in public hearings that the employees were paid by Google Ireland Ltd, rather than its British sister company.
Though the company said profits should be taxed in the jurisdictions in which they are generated, it defended its moves by saying its business was built on the search engine product generated by the US company based in Palo Alto, California.
MPs found that Google had undermined its own argument by having its intellectual property held by the Bermuda company rather than the US one which developed it – which could mean that the US was also being denied its own share of legitimate corporate tax.
Google Ireland’s tax situation is more exaggerated than its British counterpart: accounts for 2011 show the company registered an overall income of almost €12.5 billion, and turned a profit of €9.075 billion – thanks largely to the collection of advertising revenue from across Europe, the Middle East and Africa.
However, Google Ireland paid only just over €8 million to the Revenue Commissioners in corporation tax, because its pre-tax profits were just €24.4 million – thanks to the nearly €9 billion in royalties that Google Ireland paid to the Bermuda operation.
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Only €8million!! Seriously!!! I can understand they will do what they can to create loopholes to avoid tax, but still they could have at least come up with a figure that doesn’t quite do violently stick two fingers up at us.
Those “loopholes” are coming to an end in most countries too.
That’s why they’re in Ireland. Don’t believe all this trendy puke about the smart economy.
It’s not just Google here, it’s pretty much any American company. Microsoft are another under investigation in the US where they pay peanuts on the 16 billion or so funnelled thru Ireland. Both investigations could hugely affect us detrimentally but you won’t see the government doing anything about it till its too late as usual.
Taxes on the top 10% are at a 25 year low in Ireland. A bankrupt country cannot afford tax breaks.
If Companies like Google and Starbucks paid their taxes there would be less austerity and Health cuts. Job creation isn’t a strong argument as Google Ireland employs more non-Irish staff. Its immoral, hope they get what they deserve.
Without the tax breaks they wouldn’t be here hiring thousands of staff
Don’t care how many people Starbucks employ in Ireland, 35,000 in taxes paid since 2005 is a disgrace. They can f**k off out of the country, people will still drink coffee but in a Irish company that pays taxes.
#Sean- yes. It would be great if Google, Facebook, Intel, and all those pesky pharmaceuticals left this country, wouldn’t it? We could all thatch our houses, knit Aran Jumpers and sing rebels songs around the hearth. FDI has the country on life support at the moment. Ever hear of not biting the hand that feeds you? Thousand and thousands of jobs= thousands and thousands of people paying tax= thousands and thousands of people buying goods & services in our economy, which creates thousands and thousands of jobs which equals…..
the apologists of this state of affairs are frankly laughable. Sure the construction industry employed thousands, and look at what that got you in the long run in return. I say sort your house out now before you are left with even less.
[Google tax evasion]
Did you mean Google Tax Avoidance?
Supporting Tax avoidance for foreign corporations is a disgrace, and an affront to the people’s of US, UK, EU whose public services suffer, while we get a paltry take on the monies saved. We’re supporting a criminal conspiracy and have a moral and ethical obligation to stop it. If we don’t we can hardly cry foul when they let us drown in debt.
The UK have no claim on this tax. All countries declare their profits in some designated HQ it is the subsequent tunnelling of these profits to Bermuda, not Ireland, which is the only avoidance. if the affairs are regulated it will be Ireland, not the UK which benefits. HMRC is wasting its time, it’s unlikely Google are doing even avoidance there. We should try remove the Bermuda loophole though.
#Niall- the UK and US lobby exhaustively on behalf of indigenous industries to sell armaments to a wide variety of vicious, despot regimes across the world, benefitting from the abject misery of millions around the Globe. They are in no position to lecture ordinary companies on Social Responsibility, nor have they any right to cast aspersions on nations who configure their tax systems to avail of the opportunities that arise. We owe them nothing.
Couldn’t agree more with Sean.!
lets all change our search engines to bing,that will show them
Sinking ship then, innit?
Is that your best rebuttal Vincent? Sounds like you got your economics education from the same place as Brian Cowan considering you think is a leader in attracting foreign investment.
Vincent, massive contribution? That’s a gross over exaggeration. Ireland has the highest rate of corporate fraud and tax indebtedness in the EU. FDI’s cannot fulfil their recruitment drives in Ireland so they attract foreign talent because there is a distinct lack in Ireland. Can you speak more than two languages and proficient in calculus and linear algebra?
Thanks to a shambolic political leadership every man, woman, child and small business has to pick up the tab because the Irish Government are too limp wristed to collect tax from the big boys.
#Sean- off you go and do a course in economics like a good chap.
@Vincent, an economy that is built or sustained on purchasing the benefits of employment is a very poor economic model. It’s only a half-wit that agrees to eat the left over scraps off the floor which is what is has been to Ireland. Corporate megaliths need to pay their tax obligations in full.
Is it fair that Google, Intel and all those pesky pharma’s can use the Irish infrastructure, protection from the police and army and avail of staff who’ve been educated by a system that’s been propped up by state money, but not pay anything back? They are taking your money every year they refuse to pay up in full.
#Sean…by “avail of staff” you mean “employ Irish people”? I’ve no objections to that. I imagine the 15% unemployed in this country would be happy enough to be “availed of”. I wonder why it is that so many other countries are competing so hard with us to secure the FDI we have been so successful in attracting? Perhaps they are “half wits” too? Or maybe the half wits are those who don’t recognise the massive contribution they make and it’s importance at a time of national emergency.
I have long being saying I think it’s obnoxious that these company’s are allowed abuse the tax system and Ireland facilitates it. Pay your fair share where the profits are made. Sooner this is dealt with the better.
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