Original URL: http://www.theregister.co.uk/2009/11/03/turkish_tax_troubles_for_google/

Turkey whacks Google with £28.7m fine, claims tax dodging

Doubts over Dublin domicile

By Rik Myslewski

Posted in Financial News, 3rd November 2009 20:40 GMT

Google has run afoul of Turkish tax laws to the tune of 71m Turkish Lira ($47m, £28.7m).

That's the amount of a fine levied by the Turkish government against the Mountain View ad broker cum search giant, as reported by Turkish-language news sites here and here, reporting on Google's vergi cezası, or tax fine.

According to TechCrunch, Google is in the frame for attempting to dodge Turkish tax law by claiming that its operations in that country are managed out of its European headquarters in Dublin, Ireland. Or so claims the Turkish government as a result of its investigation of Google's Turkey-tax status.

The sticking point is that Google does have a legal Turkish presence - a bona fide Turkish company by the name of Google Reklamcılık (advertising) ve Pazarlama (marketing) Limited Şirketi. And seeing as how Google Reklamcılık ve Pazarlama is a Turkish company, the government reasons, Google is liable for Turkish taxes.

Interestingly, TechCrunch points out that a Turkish lawyer tells them that had Google instead established what the lawyer calls a "liaison" company, Mountain View would have a stronger legal leg to stand on. As it is, with Google Reklamcılık ve Pazarlama being a Turkish entity, the company's Ireland argument may turn out to be a weak one.

Google, as might be assumed, isn't admiting wrongdoing. A statement provided to The Reg by a Googlian spokesperson claims that "Google complies with tax law in every country in which it operates. We are currently in discussion with the Turkish authorities about this, and are confident we comply with Turkish law."

And the Turkish government appears to be equally confident that Google doesn't. Expect this contretemps to drag on for some time.

In any case, as one of the Turkish articles cited above says, the Turkish internet ad market is growing rapidly, and Google is that country's market share leader. As Turkey continues its rapid modernization, and as increasing amounts of revenue flows through the Turkish web-advertising market, it appears that Ankara wants to ensure that it gets what it argues is its fair share. ®