6 ms·

Google pays no tax on £1.6bn in Britain

8 points by AndrewWarner 17y ago

jmaygarden 17y ago
I fail to see what Google has done wrong. Why wouldn't they place their European headquarters in a EU country with the lowest corporate taxes rates? Also, how does the UK have any more right to complain than France or Cyprus? This is just political grand-standing!
- ronnier 17y ago
  They've done nothing wrong. But what they have done is promote and campaign for politicians who advocate higher taxes, then turn around and do everything possible to avoid such taxes. http://online.wsj.com/article/SB122446734650049199.html http://online.wsj.com/article/SB122446734650049199.html (Google CEO Eric Schmidt will hit the campaign trail this week on behalf of Barack Obama) http://gawker.com/5119039/google-execs-pay-150000-for-obama-bash http://gawker.com/5119039/google-execs-pay-150000-for-obama-... (Google Execs Pay $150,000 for Obama Bash)
  - MikeCapone 17y ago
    I don't think taxes were the only issue for Eric Schmidt/Google.
  - cma 17y ago
    Only hypocritical if you don't understand what a tax is. Obama didn't go out and advocate that individual corporations voluntarily pay more in taxes. All that would do is make the companies that voluntarily did it disappear from the marketplace as they get outcompeted. He advocated that to solve a collective action problem, a majority dictates (with teeth) that all parties pay more taxes. Presumably Google could be in favor of Britain fixing the loop-hole (if it really is one) it it affects their competitors as well as them, but they aren't going to voluntarily stop using. It is like saying someone who advocates that we all quit ironing our pants in order to save energy, but in the meantime keeps ironing theirs, is a hypocrite. That isn't true, and it is a misunderstanding of what they advocated.
    - dantheman 17y ago
      The ironing example is being a hypocrite. One should lead by example, if they really care about saving energy they will change their behavior to save it.
      - cma 17y ago
        Nope, it is a collective action problem. There is a simple game theory payoff matrix: (units: e=energy_savings, ss=social_standing) One guy's payoffs: one guy iron | no iron everyone iron 0ss - 0.1e = (-0.1) | -1ss + 0e = (-1.0) no iron 1ss - 0.1e = ( 0.9) | 0ss + 0e = ( 0.0) Society's payoffs (1000 people): one guy iron | no iron everyone iron 0ss - 100e = (-100.0) | 0ss - 99.9e = (-99.9) no iron 0ss - 0.1e = ( -0.1) | 0ss - 0.0e = ( 0.0) Ironing his clothes gives the person no greater benefit than not ironing their clothes--so long as no one else irons their clothes either. It isn't hypocritical to point this out and still iron your clothes.
        dantheman 17y ago
        I understand that that it's a collective action problem, but game theory only applies if things stay constant. By practicing what he preaches, and taking the hit to ss he shows that it is important, and he can use that to convince others to do it. As more people do it, the loss of ss per person goes down, and it might even invert (lose ss for ironing).
        shykes 17y ago
        What if not ironing your pants affects your income significantly?
        dantheman 17y ago
        That's the price you pay for standing up for what you believe in.
naz 17y ago
I think the Google gives the UK a lot more than just taxes.
- illumen 17y ago
  Ad spam on web pages of the world?
petercooper 17y ago
Casually forgetting the income taxes paid by the employees, of course, though the millions paid in social security contributions (NICs) is mentioned almost as a footnote. I'm a major fan of The Sunday Times, but I can't believe they went with a non-story whose only intention is to ruffle the feathers of the Times' high income demographic (who are getting taxed to death themselves). What Google's doing is, on the surface, fully compatible with EU tax law. Devolving most of our powers to the EU is the British government's fault, not Google's.
- shykes 17y ago
  How would things be different if the UK wasn't part of the EU?
  - petercooper 17y ago
    At the least, VAT collectable by the UK would have been charged and earned on all of that £1.6bn (which would be well into the £100~200m range). Instead, Ireland got the VAT due to EU VAT collection harmonisation.
pmcginn 17y ago
And of course the only options ever presented in stories like these are more regulation and stricter enforcement. How about lowering tax rates to compete with Ireland?
- kierank 17y ago
  Just take a look at Ireland's current fiscal and overall economic position.
  - handelaar 17y ago
    And imagine how much worse it would be if Google (and Facebook, and others) weren't paying 12% Corporation Tax to the Irish Treasury.
    - drewbie 17y ago
      If you thought people were complaining about the December budget... wait till the corporations start pulling up stakes wholesale! The funny thing is Ireland has very good social welfare benefits - enough that fraud is a serious issue. A coworker told me a recent (non-gov't) investigation suggested it could be as much as 2 billion EUR per year. That's my euros the fraudsters are taking but the government can't be bothered to battle fraud more effectively! sigh
  - drewbie 17y ago
    In the December 2009 budget announcement the low corporate tax rate was specifically mentioned as a competitive advantage and would not be touched any time soon. Much to the chagrin of some law makers. IIRC Ireland has the lowest (or darn close) corporate tax rate in Europe so why wouldn't companies have their HQ here? It's simply taking the best actions for their shareholders.
Locke1689 17y ago
I have to say, what they've done seems perfectly legal -- in British law as well as Irish law. If the Brits feel wronged by this, perhaps they should consider changing the laws that allow it?
yason 17y ago
Sounds like what any company big enough would do. If this bothers the British, they might want to consider a law that allows them to tax both funds transferred to another country as well as funds reported as the company's local income. That way the country would always get their share should Google decide to have a presence in the UK.
- bensummers 17y ago
  As a member of the EU, the UK can't pass such a law. We've given up some sovereignty for the benefits of being a member of the larger entity.
abrahamsen 17y ago
Murdoch shouldn't be the one to point fingers, News Corporation (which owns Times) is one of of the world leaders in tax evasive subsidiaries. http://www.bloomberg.com/apps/news?pid=20601087&sid=aK0aqjwsiSCA&refer=home http://www.bloomberg.com/apps/news?pid=20601087&sid=aK0a...
robryan 17y ago
Couldn't the government require that money collected from UK residents go to a UK company?
- jmaygarden 17y ago
  No, the UK cannot enforce such a law without violating membership in the EU.

8 points by AndrewWarner 17y ago

I fail to see what Google has done wrong. Why wouldn't they place their European headquarters in a EU country with the lowest corporate taxes rates? Also, how does the UK have any more right to complain than France or Cyprus? This is just political grand-standing!

ronnier 17y ago
They've done nothing wrong. But what they have done is promote and campaign for politicians who advocate higher taxes, then turn around and do everything possible to avoid such taxes. http://online.wsj.com/article/SB122446734650049199.html http://online.wsj.com/article/SB122446734650049199.html (Google CEO Eric Schmidt will hit the campaign trail this week on behalf of Barack Obama) http://gawker.com/5119039/google-execs-pay-150000-for-obama-bash http://gawker.com/5119039/google-execs-pay-150000-for-obama-... (Google Execs Pay $150,000 for Obama Bash)
- MikeCapone 17y ago
  I don't think taxes were the only issue for Eric Schmidt/Google.
- cma 17y ago
  Only hypocritical if you don't understand what a tax is. Obama didn't go out and advocate that individual corporations voluntarily pay more in taxes. All that would do is make the companies that voluntarily did it disappear from the marketplace as they get outcompeted. He advocated that to solve a collective action problem, a majority dictates (with teeth) that all parties pay more taxes. Presumably Google could be in favor of Britain fixing the loop-hole (if it really is one) it it affects their competitors as well as them, but they aren't going to voluntarily stop using. It is like saying someone who advocates that we all quit ironing our pants in order to save energy, but in the meantime keeps ironing theirs, is a hypocrite. That isn't true, and it is a misunderstanding of what they advocated.
  - dantheman 17y ago
    The ironing example is being a hypocrite. One should lead by example, if they really care about saving energy they will change their behavior to save it.
    - cma 17y ago
      Nope, it is a collective action problem. There is a simple game theory payoff matrix: (units: e=energy_savings, ss=social_standing) One guy's payoffs: one guy iron | no iron everyone iron 0ss - 0.1e = (-0.1) | -1ss + 0e = (-1.0) no iron 1ss - 0.1e = ( 0.9) | 0ss + 0e = ( 0.0) Society's payoffs (1000 people): one guy iron | no iron everyone iron 0ss - 100e = (-100.0) | 0ss - 99.9e = (-99.9) no iron 0ss - 0.1e = ( -0.1) | 0ss - 0.0e = ( 0.0) Ironing his clothes gives the person no greater benefit than not ironing their clothes--so long as no one else irons their clothes either. It isn't hypocritical to point this out and still iron your clothes.
      - dantheman 17y ago
        I understand that that it's a collective action problem, but game theory only applies if things stay constant. By practicing what he preaches, and taking the hit to ss he shows that it is important, and he can use that to convince others to do it. As more people do it, the loss of ss per person goes down, and it might even invert (lose ss for ironing).
        shykes 17y ago
        What if not ironing your pants affects your income significantly?
        dantheman 17y ago
        That's the price you pay for standing up for what you believe in.

naz 17y ago

I think the Google gives the UK a lot more than just taxes.

illumen 17y ago
Ad spam on web pages of the world?

petercooper 17y ago

Casually forgetting the income taxes paid by the employees, of course, though the millions paid in social security contributions (NICs) is mentioned almost as a footnote. I'm a major fan of The Sunday Times, but I can't believe they went with a non-story whose only intention is to ruffle the feathers of the Times' high income demographic (who are getting taxed to death themselves). What Google's doing is, on the surface, fully compatible with EU tax law. Devolving most of our powers to the EU is the British government's fault, not Google's.

shykes 17y ago
How would things be different if the UK wasn't part of the EU?
- petercooper 17y ago
  At the least, VAT collectable by the UK would have been charged and earned on all of that £1.6bn (which would be well into the £100~200m range). Instead, Ireland got the VAT due to EU VAT collection harmonisation.

pmcginn 17y ago

And of course the only options ever presented in stories like these are more regulation and stricter enforcement. How about lowering tax rates to compete with Ireland?

kierank 17y ago
Just take a look at Ireland's current fiscal and overall economic position.
- handelaar 17y ago
  And imagine how much worse it would be if Google (and Facebook, and others) weren't paying 12% Corporation Tax to the Irish Treasury.
  - drewbie 17y ago
    If you thought people were complaining about the December budget... wait till the corporations start pulling up stakes wholesale! The funny thing is Ireland has very good social welfare benefits - enough that fraud is a serious issue. A coworker told me a recent (non-gov't) investigation suggested it could be as much as 2 billion EUR per year. That's my euros the fraudsters are taking but the government can't be bothered to battle fraud more effectively! sigh
- drewbie 17y ago
  In the December 2009 budget announcement the low corporate tax rate was specifically mentioned as a competitive advantage and would not be touched any time soon. Much to the chagrin of some law makers. IIRC Ireland has the lowest (or darn close) corporate tax rate in Europe so why wouldn't companies have their HQ here? It's simply taking the best actions for their shareholders.

Locke1689 17y ago

I have to say, what they've done seems perfectly legal -- in British law as well as Irish law. If the Brits feel wronged by this, perhaps they should consider changing the laws that allow it?

yason 17y ago

Sounds like what any company big enough would do. If this bothers the British, they might want to consider a law that allows them to tax both funds transferred to another country as well as funds reported as the company's local income. That way the country would always get their share should Google decide to have a presence in the UK.

bensummers 17y ago
As a member of the EU, the UK can't pass such a law. We've given up some sovereignty for the benefits of being a member of the larger entity.

abrahamsen 17y ago

Murdoch shouldn't be the one to point fingers, News Corporation (which owns Times) is one of of the world leaders in tax evasive subsidiaries. http://www.bloomberg.com/apps/news?pid=20601087&sid=aK0aqjwsiSCA&refer=home http://www.bloomberg.com/apps/news?pid=20601087&sid=aK0a...

robryan 17y ago

Couldn't the government require that money collected from UK residents go to a UK company?

jmaygarden 17y ago
No, the UK cannot enforce such a law without violating membership in the EU.