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Google may face grilling by MPs over 'immoral' tax avoidance

Politicos rattle sabre

Internet Security Threat Report 2014

Google could be hauled in front of MPs after the 2011 results for its UK subsidiary showed it paid £6m in corporation tax.

John Mann, an MP and member of the Treasury Select Committee, suggested the advertising giant should explain itself for its "entirely improper and immoral" behaviour.

"This is a company avoiding its obligations and we are letting them get away with doing it," he thundered to The Independent.

"I think it would be highly appropriate to pull a Google executive in front of the committee to justify their failure to pay proper taxes, we would be looking at covering the issue in this parliamentary session, so before Easter, realistically.

"Whether it is illegal or immoral, the British tax payer loses out. Google is one of the big ones but there are others."

A spokesperson for the committee told The Register that there were no firm plans to take the Chocolate Factory to task just yet. Parliament is not in session at the moment and won't be starting up again until September, when discussions will take place, they added.

Google UK does a tax tap-dance to shuffle its money from place to place and avoid heavy duties. The Blighty unit is employed as an agent of Google Ireland, shunting its money over there, which in turn pays its money on to the Bermudan branch of the internet giant, leaving the bulk of earnings in a tax haven. The UK business ends up with a commission fee of ten per cent, which is the bit that gets taxed in Britain.

The corporation tax rate in the Irish Republic is 12.5 percent whereas it's 24 per cent in the UK for a company the size of Google.

The company recorded a UK turnover of £395m in 2011, up from £239.4m a year earlier and an overall loss of £24m, on which the corporation tax was calculated, compared to losses of £27m in 2010.

Google reported admin expenses of £416.8m, including advertising and promos, stock-based compensation costs and employee benefits costs.

The firm said in an emailed statement that it makes a "substantial contribution to the UK economy through local, payroll and corporate taxes".

"We also employ over a thousand people, help hundreds of thousands of businesses to grow online and invest millions supporting new tech businesses in East London. We comply with all the tax rules in the UK," it added.

While it might be legal to have different subsidiary units employing each other and thereby escaping high taxes, it's the sort of behaviour that has enraged the general public since the global downturn.

An online petition to make Google pay its "fair share", run by campaign community 38 Degrees, has already reached nearly 45,000 signatures. ®

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