MPs have claimed it is “impossible” to judge whether Google paid the right amount of tax to HMRC following its six year investigation into the tech giant’s tax affairs.
Earlier this month, Google and HMRC bosses were summoned before the Public Accounts Committee to explain how the taxman reached an agreement with Google over its unpaid corporation taxes.
However, the lack of transparency about tax settlements meant HMRC was unable explain how it arrived at the settlement, or demonstrate that the rules have been applied correctly, the influential cross party committee said in a report into the tax deal.
Google’s settlement with HMRC, in which it paid £130m to covers back tax owed since 2005, sparked outrage from tax campaigners over the ‘derisory’ amount paid by the Silicon Valley firm, which earned over $7bn, or around 10% of its global revenues, from sales to UK customers in 2015.
“The small amount of tax paid in proportion to the scale of Google’s UK activities means that there are legitimate questions about this settlement; we still do not know if Google paid the right amount of tax,” the committee said.
“HMRC should consult widely, including with other tax authorities, on the case for changing the rules that protect corporate taxpayer confidentiality to make the tax affairs of multinational companies open to public scrutiny.”
Critics have called on the government to details of the deal public, including shadow secretary John McDonnell, who repeatedly questioned treasury secretary David Gauke on this subject in parliament last month.
According to reports French and Italian tax authorities are looking to extract much more in corporation tax than Google paid to HMRC, leading the PAC to believe HMRC has settled for less corporation tax from Google than other countries are willing to accept.
“We expect HMRC to monitor the outcome of other tax authorities’ investigations into Google, and re-open its settlement with Google if relevant new evidence becomes available,” the PAC said.
The ATT had previously expressed concern that the legislation was overly complex and created unnecessary complications within the practical working of the new allowances
Introduced in 2013 to encourage R&D investment, the scheme allows UK businesses to pay only 10% corporation tax on profits derived from any UK or certain EU patents
Yet, KPMG’s annual survey shows that the UK is still an attractive place to do business, despite falling in rankings in tax competitiveness and FDI appeal
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