UK party leader: Google takes 'extraordinary lengths' to avoid taxes

UK party leader: Google takes 'extraordinary lengths' to avoid taxes

Summary: Apple is under scrutiny in the U.S., and Google is facing the same treatment in the United Kingdom over tax avoidance.

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Opposition Labor party leader Ed Miliband has accused Google of going to "extraordinary lengths" to avoid paying tax on U.K. soil.

Ahead of next month's G8 summit -- where company tax avoidance is likely to become a hot topic -- Miliband plans to tell visitors at a Google event today close to London that he is "disappointed" that the tech giant pays so little tax.

Ed_Miliband_(2010)
Credit: Wikimedia Commons

"I can't be the only person here who feels disappointed that such a great company as Google...would be reduced to arguing that when it employs thousands of people in Britain, makes billions of pounds of revenue in Britain, it pays just a fraction of that in tax." Miliband will say within his speech, according to Reuters.

"So when Google does great things for the world, as it does, I applaud you, but when Google goes to extraordinary lengths to avoid paying its taxes, I think it's wrong."

British lawmakers are under rising pressure to tackle the issue of tax avoidance and the tactics used by large firms to avoid high sales and corporate taxes. In November, Google and Amazon came under the spotlight in front of the U.K.'s Public Accounts parliamentary committee, which grilled the firms on why they did not pay the 23-24 percent corporation tax rate in the U.K. Amazon admitted it operates officially out of Luxembourg where the tax rate is lower, whereas Google stipulated it pays as much tax as the U.K. requires -- and so how it operates in Europe should not be of concern.

A number of firms use tactics described by U.K. officials as "smoke and mirrors," in other words, operating subsidiaries and being officially located in countries where tax is lower, and some use offshore accounts to prevent funds being taxed when transferred overseas.

Although these methods are legal -- unlike tax evasion -- public anger is enough that a number of petitions have been started in order to try and make taxation fairer. A petition launched by independent booksellers Frances and Keith Smith demands that Amazon "pays its fair share of tax in the U.K.," and has gained 168,844 supporters at the time of writing.

In an article for The Huffington Post UK, the labor leader criticized Prime Minister David Cameron for not taking a tougher stance.

"Google is said to have paid only 10 million pounds in corporation tax in the UK between 2006 and 2011, despite revenues of 11.9 billion pounds. I was surprised the prime minister failed to raise this when Eric Schmidt attended the business advisory council's meeting."

Google and Amazon are not the only ones under governmental scrutiny. Across the pond, Apple chief executive Tim Cook has testified to the U.S. Senate Permanent Subcommittee on Investigations on how the tech giant manages its tax arrangements. Congress accused the company of creating a complex web of subsidiaries in order to avoid the 35 percent sales tax rate in the U.S., whereas Apple defends its position based on legality. Cook said that funds will stay off U.S. soil unless the taxation rate becomes "reasonable," whereas Sen. Carl Levin believes the current system is simply "not right."

Topics: Google, Apple, Government US, Government UK, Legal

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13 comments
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  • google, apple and amazon takes extraordinary measures to pay less taxes.

    Don't we all?
    Jean-Pierre-
    • Yes we do

      But legislation is needed to close tax avoidance loopholes.

      If the likes of google and others don't like that then they would be legally entitled to withdraw the revenue generating products from those markets. That wouldn't present a big problem since market forces would soon fill the gaps with similar products from other companies who will pay the taxes.
      Xippy
      • Every hardworking person should avoid as much tax as possible

        Don't let the big government propaganda fool you. Government does not deserve collecting your hard earned money and wasting on nonsense socialistic programs.
        LBiege
        • Socialist programs

          Im guessing by "socialistic programs" you mean welfare and public funded healthcare? I don't see any signs that European citizens want to abolish these and the EU has just announced a consensus agreement to cooperate in reforming tax law to close these loopholes.
          Xippy
  • Taxes

    As a Google stockholder I would be very glad of them avoiding as much tax as they can as long as they stay legal. That is what their responsibility to their stockholders is.
    hayneiii@...
    • Taxes again

      As a non-Google stockholder and a tax-payer I have the opposite view. Perhaps if there were less loop-holes in other countries then US companies would return their revenue to the US in the form of taxes and work opportunities. The UK was wrong to allow regulations that allow Star-bucks to pay next to no taxes in the UK while small UK businesses had to compete with higher taxes. It's neither fare or ethical but it is still legal. Just because something is legal does not make it correct.
      jsargent
  • The problem I have with this statement ...

    "I can't be the only person here who feels disappointed that such a great company as Google..."
    by a politician or ZDNET blogger is ...
    ... the only reasons you say you are disappointed are:

    - you are so unbelievably naïve that you don't deserve to be a politician/blogger
    - you are complicit in your feigned disappointment

    After all the corruption foisted on us from all global corporations over the last 25 years you have to be intellectually or ethically challenged to make such statements.
    jacksonjohn
    • "... great company such as Google ..."

      As I have pointed out before there is a vast difference between:
      - 'great' as in 'large'
      - and 'great' as in 'reputation'
      jacksonjohn
      • Regardless, Using Great When Referring To Google is Wrong

        When a word's use is ambiguous it is the wrong word to use. If large was meant, then Big would be more appropriate, as in Big Bad Wolf.
        Patrickgood1
  • Time for Mr. Leader of the Opposition to propose a fix

    This is a good opportunity for him to demonstrate that he'd make a good Prime Minister.
    John L. Ries
    • Please don't say that!

      What the hell they'll come up with if they get into power is anyone's guess! Spend our way out of trouble like all strong economies have......
      Little Old Man
  • "I can't be the only person here who feels disappointed that"

    He's the leader of the opposition. It's been some time since we had such a lame, reactionist spin merchant as a main party figurehead.
    Little Old Man
  • Ban Google from Doing business in UK.

    That's one way of solving the problem. Another way is to tell them to have a office in UK which bills UK customers and that office will have to pay tax. Just because they are selling info which can be done from anywhere, does not mean that they are any different from someone selling physical stuff in a country.
    ADboy