Google has been accused of ignoring its own mantra and doing “evil in using smoke and mirrors to avoid paying tax” by UK MPs this week.
Google’s tax affairs are currently being examined by the public accounts committee, claiming that it conducts no sales activity in the UK.
Committee chairman Labour MP Margaret Hodge described as a “stream of whistleblowers” that employees in the UK had been paid commission for sales activity here in the UK.
“It was quite clear from all that documentation that the entire trading process and sales process took place in the UK,” Hodge said.
Google says that as the billing for advertising sales are paid in Ireland, their UK workforce is not involved in sales.
At the committee, Google Vice President Matt Brittin said the evidence related to the period before he joined the company six and half years ago and that suggestions that Google was trying to “disguise” the way it operated were “just not true”.
However Mrs Hodge described the payslips shown by a whistleblowing former senior salesman which showed the payment of a “modest” salary and three or four times that amount in commission for making sales and “closing deals”.
Hodge added: “I simply suggest to you again that you think about what you actually said on November 12 which was that ‘anyone who buys advertising from us in Europe buys from Google in Ireland, from our expert teams’. That is not what the whistleblower told us and that is not what the documentation demonstrated. I think you should think really carefully about what you said to us and whether or not that holds true.”
Amyas Morse, head of the National Audit Office and Comptroller & Auditor General, told Mr Brittin the issue was not “going away” because people remained sceptical: “There are a tonne of people who are listening and saying we think they are selling in the UK.”
Hodge drew the Google evidence to a close by remarking “you’re a company that says you do no evil, and I think you do ‘do evil’ in that you use smoke and mirrors to avoid paying tax.”
The probe follows a wider international effort to get companies to pay more tax as governments cut spending programs to curb deficits. Apple Chief Executive Officer Tim Cook will be the subject of a May 21 Senate hearing on US companies’ offshore tax practices, two people familiar with the inquiry said this week. Apple uses a similar strategy to the one used by Google to cut its income taxes.
The Guardian reported this week that the UK arm of Amazon paid £3.2m in corporate income taxes in 2012. In its annual report in the US, Amazon reported UK sales that year of almost $6.5bn.
Watch a video from Channel 4 showing Brittin being questioned by the committee here: