Here in the UK we have a number of large overseas companies earning cash from UK customers but paying little or no tax. It’s usually achieved by the company in question shifting cash around internally or operating from foreign shores.
Amazon, for example, is based in Luxembourg and made £3.35 billion last year. They only paid £1.8 million to the treasury. Facebook bagged themselves a UK income of £100 million, but paid just £5000 in tax. That’s probably less than you pay in tax on your yearly income.
Now Google are seeking to “pay their fare share” and Matt Brittin, President of Google Europe, has revealed that they will pay up £130 million in respect to “past taxes”.
He has told the BBC that…
The rules are changing internationally and the UK Government is taking the lead in applying those rules, so we’ll be changing what we’re doing here (in the UK). We’ll be paying £130 million in respect of previous years when the rules were to pay in respect of profits you make in a country.
We’ve agreed that we will be paying more tax going forward and that we will be paying the right amount of tax with the tax authority in the UK after a thorough routine review.
Google is seeking to take the lead here, but they don’t mention the six year inquiry that HMRC (Revenue and customs) have undertaken against them. They looked at 10 years of tax payments and, from what we can see, this £130 doesn’t really cover the rather substantial gap between what Google should have actually paid. It’s still loose change for Google. In a way it’s a deal which will make HMRC and Google both look good, plus it’ll shift the spotlight onto other tax-dodging companies.
Those companies include Apple, who paid less than 2% tax on profit made outside the USA last year. They paid £10 million in UK tax despite achieving around £6 billion in sales. Cadbury, after being bought and then completely ruined by a US company, have switched control of the company to Switzerland. This deprives the UK tax man of £60 million in tax yearly. There’s also eBay, who have avoided a £50 million corporation tax bill by channelling payments through Luxembourg and Switzerland.