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Google only paid £6 million ($7.8 million USD) in UK corporation tax

The United Kingdom isn't happy with Google's corporate tax record, but executive chairman Eric Schmidt said that Google is responsible for significant economic growth in the country.

The UK has said that it is "immoral" for multinational companies like Google to pay such low taxes on their earnings in the UK. Leaders in the UK, France and Germany have all called for a way to stop profit shifting by multinationals, which is used to dodge taxes.

The UK is especially concerned with the fact that Google only paid £6 million ($7.8 million USD) in UK corporation tax. 

Google executive chairman Eric Schmidt defended his company's tax record, saying that Google has complied with the law and has even helped stimulate growth in the UK.

"Britain has been a very good market for us," said Schmidt. "We empower literally billions of pounds of start-ups through our advertising network and so forth. And we're a key part of the electronic commerce expansion of Britain, which is driving a lot of economic growth for the country."

"I think the most important thing to say about our taxes is that we fully comply with the law and we'll obviously, should the law change, we'll comply with that as well."

Back in January of this year, Google was criticized for skipping out on paying about £1 billion ($1.6 billion USD at the time) in UK taxes. It did this by funneling a large portion of its global revenue through the island of Bermuda. 

Google sent £6 billion through Bermuda over the course of 2012, which halved its 2011 tax bill. In fact, Google funneled 80 percent of its global revenue through the island and ended up paying about £1 billion less to the government.

“I do believe we all have a common interest in being able to tell our taxpayers who work hard and pay their fair share of taxes that we will make sure others do the same,” wrote UK Prime Minister David Cameron in an open letter to the G8.

Schmidt defended Google at that time as well. 

“We pay lots of taxes; we pay them in the legally prescribed ways,” said Schmidt. “I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate.”

In April of last year, it was reported that Apple made $9.5 billion USD in Britain for 2011, but only paid 0.16 percent in taxes. Amazon was also targeted for its headquarters in the tiny European Union nation of Luxembourg and Google's placement in Ireland with subsidiaries in the Caribbean and Luxembourg for more tax dodging gains.

Source: BBC News

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legal loophole
By Nortel on 4/23/2013 2:10:38 PM , Rating: 2
I think this article begs the question: "Why don't they just shut down that loophole in the law?"

RE: legal loophole
By haukionkannel on 4/23/2013 2:32:45 PM , Rating: 2
Because the company would move to the other country with the same loophole intact... So they hope that company would not use that loophole, but are not willing to close it...
So it is easy to say that nations have multi personality disorder synthoms :-)

RE: legal loophole
By Flunk on 4/23/2013 3:35:49 PM , Rating: 2
That isn't true, there are already countries with a lot more legal loopholes than the UK. A lot of large corporations in the USA for example, pay almost no corporate tax at all.

The fact that the UK is complaining about this at all is very different from many other countries.

RE: legal loophole
By Hakuryu on 4/23/2013 2:52:01 PM , Rating: 5
Because the politicians that made the tax laws are often on the boards (or will be offered a position later), have a huge chunk of stock, and/or receive a ton of money for re-election bribes from these companies. You don't bite the hand that feeds you.

RE: legal loophole
By TakinYourPoints on 4/23/2013 5:27:45 PM , Rating: 3
Yup. The very wealthy will keep gaming the system so that it benefits them. Doesn't matter if they have a liberal or conservative label on them, its all the same nonsense.

RE: legal loophole
By nafhan on 4/23/2013 6:17:55 PM , Rating: 5
"Our laws suck! Let's find someone to blame!"
--British lawmakers (really, every lawmaker, ever)

Keep in mind a politicians job is to get re-elected. Raising a big stink over something they have no intention to change may get them closer to their goal (re-election) then getting meaningful things done.

RE: legal loophole
By Aloonatic on 4/24/2013 7:06:26 AM , Rating: 4
It depends on the loophole.

The chancelor (guy in charge of the budget/taxes etc) tred to close a loophole in the UK a while ago where people would give money to charities as a way to avoid paying taxt, by limiting hte amount they could give.

Then there was a backlash from the public, so he stopped it.

A few weeks later a well known British Comedian was found to have been paying hardly any tax and everyone was up in arms about it, saying (Tory) politicians let the rich get away with it etc.

How was he doing it?

His accountant was "ddonating" all the comedian's earnings to a "chatritable trust" whch then in turn just happened to "loan" money back to the comedan with zero interest and didnt' intend on every trying to get it back.

In the end, it's easy to blame politicians, but really, ultimately, it's the people who screw each otehr over, and we'd all probably try to get away with paying as littel tax as possible too, same as we would for our companies if we ran our own business or whatever.

RE: legal loophole
By fteoath64 on 4/25/2013 8:23:34 AM , Rating: 2
Yeah, for goodness sake, the G8 can CLOSE the Loop hole and "force" all smaller countries to do the same and be done with it!. But it will NOT be done because the Corporations CONTROL the politicians. Until people wake up to this fact, things will just get worse as the greed and exploitation of corporations goes unchecked and blazoon out of control!.

Right and Wrong vs Legal and Illegal
By jRaskell on 4/23/2013 3:26:05 PM , Rating: 2
Let's be clear here. Right and Wrong don't necessary go hand in hand with Legal and Illegal. Never have.

While what Google, Apple, and a whole slew of other multi-national corporations are doing may be legal, that doesn't make them right. They can spout all the babble they want about boosting economies, but when their taxes are a miniscule fraction of the portion of their revenues compared to what the average Joe pays, that is just wrong.

Unfortunately those loopholes were intentionally put into place for the extremely wealthy to use, and naturally corporations are taking advantage of them as well. Those loopholes aren't going away.

RE: Right and Wrong vs Legal and Illegal
By GatoRat on 4/23/2013 4:16:41 PM , Rating: 1
And I'm sure you throw in some extra dollars (or pounds) when filing your taxes. I'm sure you take your personal deduction. You may even itemize. You may tax an education tax credit. All legal, but by your standard morally reprehensible.

Incidentally, the loopholes were put in by politicians, generally because it made good business sense. To discount the revenue from income and sales taxes of employees of these companies is extremely dishonest.

RE: Right and Wrong vs Legal and Illegal
By jRaskell on 4/24/2013 11:57:19 AM , Rating: 2
At no point did I state, or even insinuate, that taking any deductions whatsoever was 'morally reprehensible'. So that comment is complete garbage.

I pay over 15% of my income in taxes every year (as a US citizen), even with the deductions I can take. I'm fairly comfortable stating I pay my fair share in taxes, perhaps even more than my fair share.

That is 100 times higher, as a percentage of income, than Google paid to the UK. So I'm also fairly comfortable stating that Google is in no way paying their fair share in taxes.

To discount the revenue from income and sales taxes of employees of these companies is extremely dishonest.

I'm not sure dishonest is the word you mean to use there. There's absolutely nothing dishonest about it. If you believe there is, please explain what is so dishonest about it.

The employees of those companies, being citizens of the country and/or state they are paying taxes to, gain a variety of benefits and securities as a result of those taxes being paid.

The corporations they work for also gain a variety of benefits and securities from the countries and/or states they operate in, so I see absolutely no reason their employees should have any bearing on their taxes.

By Reclaimer77 on 4/25/2013 1:16:25 AM , Rating: 2
There's nothing "morally right" about paying more taxes than you're legally required.

I know the argument you're trying to make, and it probably is a big hit with the Liberals, but it's garbage.

So I'm also fairly comfortable stating that Google is in no way paying their fair share in taxes.

Fair share...riiight. Obama, is this you? Google paid all taxes legally required. "Fairness" doesn't enter into it at all.

Wtf do you expect? Google to just hand the UK a big ass check 'just because'?

RE: Right and Wrong vs Legal and Illegal
By nafhan on 4/23/2013 7:14:34 PM , Rating: 2
Corporations are not people (or moral entities) they are legal frameworks for distributing risk. They can't do anything "wrong". They can only engage in legal or illegal activities.

Politicians talking about right and wrong in this regard = (probably) politicians trying to blame someone else for their problems.

RE: Right and Wrong vs Legal and Illegal
By jRaskell on 4/24/2013 12:03:17 PM , Rating: 2
So Enron did nothing wrong?
Lehman Brothers did nothing wrong?

You're right that corporations are not people, but they are run by people. corporations don't DO anything at all, right or wrong, legal or illegal. They don't engage in any activities. It's the people operating within them that do anything. And when anybody talks about what a corporation does or doesn't do, it's quite clear they are actually talking about the people running that corporation. At least, it's clear to anyone with a modicum of reasoning.

By nafhan on 4/24/2013 1:22:13 PM , Rating: 2
That depends on how you define right and wrong. What matters is that they did something illegal.

In my experience, discussions involving "right and wrong" are most often used in the context of swaying someone to your point of view rather than attempting to convey information.

Google Didn't Write your Tax Code
By stm1185 on 4/23/2013 7:57:54 PM , Rating: 3
Google is following the Tax code as specified to the best benefit of themselves, as everyone who is not crazy does. If the UK does not like the amount of corporate tax Google pays, THEN THEY CAN CHANGE THEIR TAX CODE! Google is doing nothing illegal or immoral (in regards to taxes).

RE: Google Didn't Write your Tax Code
By Schadenfroh on 4/23/2013 8:22:37 PM , Rating: 3
Agreed! Personally, I find it odd to even have a corporate income tax, always seemed to be double taxation between capital gains tax on dividends and corporate income tax.

By maugrimtr on 4/26/2013 5:36:40 AM , Rating: 2
It's not really double taxation. Your share price will reflect the deduction from profit of tax before it becomes subject to capital gains so it's something of a smoothing approach - get predictable income without relying on volatile markets or long term holdings which aren't generating regular tax income.

By ShieTar on 4/24/2013 10:14:25 AM , Rating: 3
Actually, they are doing something immoral. It may not be illegal, but while law and morale are often correlated, they are not the same thing. A moral action is one that could be copied by every single person without a negative effect for the community. This is not the case with tax evasion / loopholing. If everybody does it, the governments will collapse and it's back to the medieval ages for us. Much good your millions will do you, if the poor part of the city starts to emit marauding bands of bandits.

Google is profiting immensely from government spending. They are using public infrastructure, they have personal and customers educated by public institutions, their whole business model would be impossible without government-funded developments like computers, software, the WWW. Nobody who operates a small farm makes millions of dollars just because he is that good, big companies and well-paid specialists can only exist in todays well connected infrastructure, with its expensive infrastructure and global level of education. Most of all, nobody would give a crap about Googles services while starving, or while about to die from cholera or while being under attack by Vikings. The government can live without Google, but Google would be utterly dead without the society that modern governments have generated in the last 500 years.

And yet Google and other big companies do their best to reduce the government income as much as possible, happily abusing every loophole that some powerful lobby has managed to push through in the last few decades. This is not what "everyone who is not crazy does", it is financial terrorism. I have never attempted to "save taxes" by moving money to other countries. Not because I don't know how or because it would not pay off, I do pay the peak tax rate in Germany. I don't do it because it is indeed deeply immoral and I remember my history lessons well enough to understand what the excessive accumulation of wealth has done to the world-wide economy at a dozen occasions over the last 500 years.

By Vonrikken on 4/24/2013 12:10:47 AM , Rating: 3
Funny that they have little to say about the Barclay twins making billions in the UK, owning and operating the Ritz in London and a media empire, yet paying almost zero in taxes due to living on their privately owned tax haven island off of sark. Yet it is "immoral" when google does it. Maybe they don't want to change the law and mess it up for influential brits using the same scheme

So why these laws?
By dnd728 on 4/23/2013 6:28:55 PM , Rating: 2
The UK has said that it is "immoral" for multinational companies like Google to pay such low taxes on their earnings in the UK

Somewhat hypocritical when you yourself allow foreigners avoiding their taxes...

Let's summarize this
By BRB29 on 4/23/2013 10:59:09 PM , Rating: 2
Politicians takes bribes and make loop holes in tax laws
Companies uses loop holes
Recession hits and country is in debt
Politicians realize they missed out on billions by creating this loop hole
Politicians complain about loopholes
Politicians makes laws to cover up loop holes
Companies lobby and find politicians to make loop holes
Politicians takes bribes and make loop holes in tax laws
and so on and so on...

Politicians only cry foul when it's convenient for them.

close the loopholes
By rob19478 on 4/24/2013 4:20:54 AM , Rating: 2
Then just close all the freaking loop holes that you made to accommodate your party rich business sponsors/"close friends". Same thing was last year with the article about how little Apple paid in taxes. All have to pay taxes not just the medium and low income earners we already have it hard

Guardian Google cartoon
By Tony Swash on 4/23/13, Rating: 0
"I'm an Internet expert too. It's all right to wire the industrial zone only, but there are many problems if other regions of the North are wired." -- North Korean Supreme Commander Kim Jong-il

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