Google executives grilled by MPs over tax arrangements with HMRC
Google’s UK chief was grilled by the House of Commons Public Accounts Committee over the tech giant’s tax arrangements with HMRC.
Google recently struck a £130m deal with HMRC to cover taxes due over the past decade. Chancellor George Osborne called the deal a “victory”, however, PAC chairwoman Meg Hillier said that the general public felt “anger and frustration” over the amount paid.
Matt Brittin, Google’s president for Europe, the Middle East and Africa, said that he understood the committee’s frustration over the figure, but pointed out that the company paid corporation tax at 20% on activities in the UK – just like all other companies.
The deal between Google and HMRC angered many UK taxpayers over the much lower-than-expected figure.
Brittin said that the amount Google owed was calculated after a “six-year rigorous, independent tax audit” by HMRC.
Google’s global tax chief, Tom Hutchinson, stressed that Google did not negotiate the settlement with HMRC, he said that they did not “throw out a number – it’s not a negotiation”, adding: “There was no top-line figure; that’s not how the process works.”
Hillier pressed for information on Brittin’s pay
Hillier demanded that Brittin provide details of how much he gets paid, to which he responded: “I don’t have the figure but I will happily provide it.”
Hillier said: “You don’t know what you get paid? … Out there, taxpayers, our constituents, are very angry, they live in a different world clearly to the world you live in, if you can’t even tell us what you are paid.”
Mr Brittin replied: “I understand the anger and understand that people when they see reported that we are paying 3% tax would be angry. But we’re not. We’re paying 20% tax.”
The practice of channeling payments to Bermuda through a subsidiary in the Netherlands nerved some MPs.
Brittin told the committee that sales channeled to Bermuda “has no impact on the tax we pay in the UK”, adding that it is “a commonplace arrangement for American companies”.
This irked some members of the committee. Stewart Jackson said: “You have made a choice to avoid tax and you have set up structures so to do. There is an element here of ‘We are doing the UK taxpayer a favour by paying tax’.”
While David Mowat commented: “Our concerns are not that you should be taxed on sales, but that you have come up with a number of contrived mechanisms, such as the ‘Double Irish’, the ‘Dutch Sandwich’ and the use of Bermuda.”
Google tax boss Mr Hutchinson said: “We are paying the fair amount of tax worldwide. It’s up to governments to decide where we should be paying that tax. I would love to see the system more simple so we wouldn’t have to come to hearings like this to explain it, but we need governments to work together to develop an overall worldwide system to take that 19% and split it in a simple way.”
Google calls for a reformed tax system
Mr Brittin said in an article published by The Telegraph on Thursday that Google wanted the international tax system to be reformed.
Last year the company paid $3.3bn in corporation tax, mostly in the US – where its products were created.
“We have long been in favour of simpler, clearer rules, because it is important not only to pay the right amount of tax, but to be seen to be paying the right amount,” Mr Brittin wrote.
“But changes to the tax system are not Google’s call. Reform must come from governments, not from the companies who are subject to their rules.”