EU competition boss says could look at UK’s Google tax deal

It was announced over the weekend that the Revenue and Google, which has faced years of public backlash over the amount of United Kingdom corporation tax it pays, had reached a deal for the internet giant to pay £130m back in tax covering a 10 year period.

“It is impossible to say for certain how the company managed to achieve such a substantial discount on the standard rate of tax, as the details of the deal remain confidential”, the Tax Justice Network said in a January 28 letter to the European Commission’s Secretary General.

Chancellor George Osborne has insisted the deal is a “major success” but his Cabinet colleague Patrick McLoughlin said he would “like to see Google making more payments to the country” and suggested Whitehall’s financial watchdog could examine it.

He said: “As a United States company, we pay the bulk of our corporate tax in the U.S.: 3.3 billion dollars in the last reported year. If someone writes to us and says “well maybe this is not as it should be” then we will take a look”, she said.

When requested for a comment about the Italian tax report, a Google spokesperson said: “Google complies with the tax laws in every country where we operate”.

Rupert Murdoch, the boss of British newspapers The Times and The Sun and now facing accusations that he and his executives were too close to senior British politicians during the United Kingdom ‘phone hacking scandal, send several tweets on Wednesday claiming that the “posh boys in Downing Street” are in awe of Google.

“But I believe in a low tax base, I believe in attracting companies here, but I believe when those companies are here they should pay their tax which is rightly collected”.

Google, which makes most of its United Kingdom profits through online advertising, paid £20.4m in United Kingdom taxes in 2013.

But a Number 10 spokesman said that diverted profits tax was being applied only to those companies which fail to pay corporation tax at the appropriate level.

“It is also grossly unfair on smaller businesses, who are unable to shift profits between tax jurisdictions and have to pay the full amount due under United Kingdom law”.

Google’s dominance of the search and online advertising market has brought it plenty of attention from the European Commission’s competition directorate, but the company has until now avoided becoming embroiled in the Commission’s investigation into the way companies move their profits to the countries that will offer them the lowest tax rates. Google is alleged to be paying just 3% in tax in the UK. The company earned revenues estimated at 24 billion pounds in the United Kingdom, a figure that should net in taxes of about 2 billion pounds.

“It’s fair for us to ask, if ministers and advisers have been having meetings with Google, for them to explain what those meetings are about”, she said.

“This bad deal is very bad news for everybody because it shows that the United Kingdom prepares itself to become a kind of a tax haven to attract the multinationals”.