THE EU’s competition commissioner Margrethe Vestager has opened the door to a potential investigation into Google’s tax dealings if somebody comes forward and makes a complaint.
Critics both in the UK and abroad have questioned Google’s £130m payment in back taxes to HMRC, with shadow chancellor John McDonnell labelling it as “sweetheart” deal with the technology company.
Speaking on BBC Radio 4’s Today programme, Vestager called the sweetheart deal “unfair” as it disrupts healthy competition.
“If we find that there is something to be concerned about if someone writes to us and says, well, this is maybe not as it should be then we will take a look,” said Vestager.
“Hopefully, we will end up in a situation where companies pay taxes in the countries where they also make their profits and these new proposals will take us another step down that road, continued the commissioner.
Today the European Commission is expected to lay out plans to crack down on multinational tax avoidance. This comes less than 24 hours after the OECD announced that 31 countries have agreed to sign a new agreement that enables the sharing of country-by-country reports.
The Multilateral Competent Authority Agreement (MCAA) was signed at the OECD’s headquarters in Paris yesterday, aiming to help authorities like HMRC gain a “complete understanding of the way multinationals structure their operations”. The agreement was signed by a number of international powers, including the UK, France, Germany, Luxembourg and Ireland, the country where Google currently books its UK sales.
As international authorities look to clamp down on multinational tax avoidance, Peter Barron, Google’s European public affairs chief has written a letter to the Financial Times to defend the company’s actions.
“After a six-year audit we are paying the full amount of tax that HM Revenue and Customs agrees we should pay… Governments make tax law and tax authorities independently enforce the law, and Google complies with the law,” wrote Barron.
“As a US company, we pay the bulk of our corporate tax in the US: $3.3bn in the last reported year.
“What should Google pay in the UK? We pay tax based on the value added by the economic activity of our staff here, at the current standard rate: 20%.”
Research also finds that 84% of businesses believe that the government has not provided enough information about digital tax plans
A total of £16bn was lost through tax fraud last year, according to estimates released by Pinsent Masons
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Additional tax a result of compliance investigations by HMRC, but overall revenue falls