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Google Accused Of UK Tax Avoidance

Revenue channeled through Ireland to save millions?

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It’s well known that big corporations employ brilliant accountants in an effort to save money at every turn.  Google seems to have been caught doing some less than up-front things, however, as the search giant’s been accused of routing revenue through Ireland in order to avoid a big UK tax bill. 

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The Sunday Times hired an accountant to investigate Google, and Robert Watts reported this weekend, "More than 90% of Google’s UK revenues are channelled through Ireland, where corporation tax is levied at 12.5%, compared with 28% in Britain."  This supposedly saved the company £110 million (or about $160 million at the current exchange rate) in 2007.

Also, "Google avoided a further €135m [or $173 million] in tax from Ireland during 2007.  The search engine’s Irish subsidiary is owned by one of two companies Google has set up in the tax haven of Bermuda."

And as you might expect, a great many people are now rather unhappy.  Vince Cable, the deputy leader of the Liberal Democrats, and Austin Mitchell, a Labour MP, both pointed out that tax dodges effectively put more of a burden on honest organizations and individuals.

Her Majesty’s Revenue & Customs (a department of the British government "here to ensure the correct tax is paid at the right time") may take action.  In the meantime, Google has at least raised some serious questions about right, wrong, and high tax rates.

Google Accused Of UK Tax Avoidance
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  • http://www.marketappeal.co.uk/ SEO Alchemist

    I don’t recall Ireland complaining about Google being based there.

    Is it Google’s fault that our tax system makes the UK uncompetitive in a global economy or that we pay higher taxes, because we’re too poor to leave?

    This sounds much like the newspapers complaining that they’re going out of business because “Google invented the internet”.

  • http://www.best-dvd-price.co.uk Cheap DVDs

    I don’t think Google are the only company to do this sort of thing, but they will get the headlines.

    It’s far easier for companies to work different countries’ tax systems to their advantage when their operations are mainly online, and this is likely to increase in the future.

  • http://www.parvoindogs.com parvo

    Technically, if the accusation is tax avoidance, I don’t see anything wrong with it. Simply because, in accounting, tax avoidance is a legal way to avoid tax. On the other hand, if it’s tax evasion, this is absolutely a crime. I’m not surprised with this issue because most big companies are doing this.

  • http://www.castax.com.au tax return sydney

    great posting keep it up. thank you for sharing that with us.

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    It’s tax avoidance not tax evasion. Rules are there to be worked around, and fair play to google for working round them.

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