The Guardian reported yesterday that a UK Parliamentary Committee found, essentially, Google had improperly avoided paying taxes in the UK by routing sales through Ireland where corporate tax rates are considerably lower. It’s unclear precisely what the immediate legal fallout will be; however the UK report recommends a more formal inquiry.
Committee chair MP Margaret Hodge said that Google had “brazenly” sought to avoid taxes in the UK by channeling sales through its Irish subsidiary. However, the UK report determined, based on its investigation and information from “whistleblowers,” that Irish employees were merely “processing the bills” and that sales were actually happening in the UK.
Google generated £11.5 billion (approximately $18 billion) in UK revenue during the years investigated (2006 to 2011). However, the company paid a very modest £10 million ($15.7 million) in taxes during that same period.
Google maintains it complies with all UK tax laws. Google isn’t alone in taking advantage of Ireland’s tax advantages. Apple, Facebook and Amazon equally make use of its favorable corporate tax rates.
The Parliamentary Committee report does appear to be a prelude to a formal investigation of Google, and perhaps other online companies with similar tax minimization strategies.