Search giant Google has been accused of avoiding UK tax by routing most of its earnings through Ireland. This means it saves about £100m a year by paying Irish corporation tax at 12.5 per cent rather than the 28 per cent it would face in the UK. British advertisers send their money to Google's Irish subsidiary, an arrangment …
Nothing wrong in this
If you want someone to blame try Crash McIdiot. this is just another example of him over taxing the golden goose. If we had an equivalent taxation regime to Eire there would have been no incentive to 'offshore'.
If you want more people to blame try the voters who elected gobshytes three times in a row.
This is perfectly legal. Perhaps the issue should be the excessively high rate of UK tax.
Given the current level of government spending and borrowing the tax burden for those of us who actually work is only going to increase.
Good on them!
The UK tax system is cumbersome, over complicated and the rates are too high. The very nature of the system encourages companies to look for tax savings (note:savings not dodges).
Perhaps if HMRC reduced the huge number of tax regulations to something more managable and reduced the tax rates to a level easier to swallow they would actually generate more cash through increased tax returns and a huge reduction in overheads (simpler tax laws means less need for so many tax men)
Anonymous as am a UK Contractor "saving" thousands of pounds in tax each year
Perhaps the clueless socialists in charge of this country might one day wake up and figure out what happens if you keep screwing companys for more and more money.
They tax turnover?
...all the companies that appear on this list shut their uk offices and go somewhere else overnight deepening the worst recession since the 30's. Well done lads. Stand up job.
So thats the manufacturing industry in the uk destroyed next we'll go for the tech industry... in fact anybody thats making a profit.... except the banks of course because they are too valuable to the economy.
good on google
i think this is all great if google can find a way of saving a couple of million a year good for them. then they can invest it in there free software and keep google free.
Thats how the EU works
Lots of companies are doing the same sort of thing, why pick on Google? Indeed I'd be a long way short of suprised if it turned out that a lot of companies in which government ministers have interests are doing it too.
The problem that we have here in the UK is a government that indiscriminately increases public spending year on year (regardless of whether it is targetted or effective) in order to show that they are doing something. In order to fund this they borrow money and increase taxes. European law works in such a way that you can pay your taxes in any European country where you have a presence. Obviously multinationals are going to make sure they have a presence in an EU nation where taxes are cheap, so in increasing corporate taxes UK.gov are probably reducing revenue from that particular stream. It's probably a feedback situation: revenue decreases so they increase tax so revenue decreases further, and so on.
Other multinationals play a similar game with VAT. The punter will get the best deal available in the EU, the vendor will be able to sell at lower prices than companies tied to a single nation.
One of the original stated aims of the EEC (as it was then) was to unify taxes across the whole of Europe and create a true "common market", of course this is one of the issues that the governments of member states have held out against to protect their "independence". When what they mean is they reserve the right to rob their population blind. However a level playing field on tax would stop this sort of "abuse" of the system. IMHO it's not an abuse at all, simply using the system to your advantage, you'd be a fool to do otherise.
If you think the people running this country are socialists, then you're as clueless as they are.
The Labour party is currently a capitalist free-market-economy party, with more in common with Thatcherism and Reaganomics than socialism.
If they were socialists, I might actually vote for them.
Its got nothing to do with Socialism... Even with unbloated government spending a 12.5% tax rate wouldnt add up, its clearly just an outrageously blatent attempt at tax arbitrage by the Irish....
No wonder they were the celtic tiger for the last decade- looks like its been exposed as even more of a sham that at first glance.
It seems the only winners from the EU are the corporates, gravy train politicians and small principlaties leaching money off the big countries via tax arbitrage...
If the UK tax rate was the same as The Republic's then these crooks and their bent accountants would just find somewhere else and eventually the "anti-socialist" morons posting here would be reduced to saying that it's madness to tax companies at all.
CCCTB 'common' minimum corporation tax
You'll see more about the CCCTB in coming months. It is the 'common' corporate tax at EU level, proposed by the French and backed by the UK.
They want corporation tax to be 'unified' where unified means 'raised', i.e. they want to set a minimum, below which the rate cannot fall, but let countries raise it higher than that.
They claim companies need a *uniform* tax to work properly in the EU, but the only way a *minimum* can be a *uniform* tax, is if the *minimum* is also the *maximum* tax.
As badly run economies raise corporation tax, they will pressure the EU to raise the minimum, but there can never be a lower than minimum so there is no pressure for the minimum tax to be lowered. Only pressure to raise the tax further.
Thus badly run economies want to spread their 'economic expertise' to the whole of the EU.
They've already 'unified' sales tax (i.e. it's not unified, they've set it to 15% minimum, it's no more uniform than it was, it's just that it cannot fall below 15%).
Labour taxes show the next widest spread, and so you can expect to see the labour taxes raised to nearest the French, German Belgium levels, around 50% - 70% tax.
This to me is the biggest threat to Europe, these fake 'unification to the weakest country' strategies.
live - work - do business here? - pay tax here
Or sod off somewhere else and stop whining.
Don't like the tax regime - use your vote. Offshored yourself so you can't vote? Tough shit.
If you take advantage of the UK in any way you need to pay your taxes here to have a clear conscience - or just consider yourself to be a leech.
swings and roundabouts
A lot of people in Irland buy stuff (using Google no doubt) from the North or mail order from the UK because it is cheaper.
Not so simple
As I understand it you can't just pick and choose which country you pay tax. You must pay tax in the country you are deemed to have the majority of your economic activity in.
In answer to another AC: UK income tax is lower, than say Belgium, but if you take into account all the other taxes in the UK I'm not so sure. Look at parking charges, cost of rial travel etc.
Finally it's intersting that the UK gov. got very annoyed with contractors and yet let Google run off with a far greater slice of tax money.
A few years ago, I read that Rupert Murdoch's evil empire avoids paying even more.
So they're not funding the loonies* that have ruined my former country. That'll be the "Don't Be Evil" bit in action. I've not paid tax in over 3 years for that very reason.
*I don't mean corrupt power grabbing bastards. I mean real bona fide lunatic drivel babbling corrupt power grabbing bastards. See the feevered rantings about The Passing World and The Emerging World (Order?) in the confidential guide they wrote for the clients of "lobbying firm"/"arm of government" LLM. The Best Democracy Money Can Buy (Greg Palast, www.constablerobinson.com ) indeed.
...what AOL do?
Maybe Eire wouldn't be on the verge of financial ruin if they charged a bit more than 12.5% corporation tax.
Part of the problem...
I think a big part of the problem is the fact that "services" aren't considered "shop-front". Anything bought and sold in a UK shop is charged UK VAT, regardless of where the outfit is headquartered. That means that the company pays some form of tax in both countries. Everyone is happy.
This model has always relied on physical products as the key revenue generators, and these can be taxed on entry to the country and/or at point of sale. All good. Unfortunately the "knowledge-based economy" by definition doesn't deal in physical goods, so where do we get our cut?
Reform is needed, drastically, or the UK is sunk.
Earn it here, pay the tax here
It's amusing to read people banging on about reducing UK tax levels to the more reasonable level of Ireland's when UK corporation tax levels are fairly typical of those within the EU, or even around the world.
James (@11:32) was bang on when he pointed out that it's just an attempt by the Irish to attract income from elsewhere within the EU. We saw them do the same with savings guarantees when the banks started to look dicey so it's hardly surprising.
If Google makes money in the UK it should pay tax in the UK.
A lot of Irish voters aren't particularly happy either
The Irish Government has imposed additional levies of between 4% and 10% on Irish workers, but hasn't done anything to the Corporate tax rate - a lot of people think that Google et al could have taken some of the strain. (On the other hand, the 12.5% that the Irish Revenue Commissioners collect from Google could be considered "free money", if you believe that they wouldn't have set their European offices up in Ireland without that rate).
And by the way, it's Ireland, not Eire, unless you want to want to write the rest of your post "as gaeilge".
Yep, I remember reading an article in Private Eye saying that The Sun (or one of the newspapers) managed to pay 0% tax on £300 million profit.
As that rich old biddy once said, "Tax is for the little people"
Yikes, Pot/Kettle overload!
Employee of News International accuses another company of tax avoidance. I don't know whether to be staggered or impressed by their bare-faced cheek.
Google's European HQ is in Dublin
Google actually isn't a very good example of a company using low corporation tax in Ireland to avoid UK corporation tax levels. The company has very significant operations in Dublin, including most of its physical server farms serving the European market.
Their Dublin offices are their European HQ. It's not unreasonable for them to operate from there and pay tax there and treat their UK and other European offices as subsidiaries.
There are different taxation models across Europe, how do you decide which one is 'profiteering' and which one isn't.
Ireland charges 21.5% VAT which is driving vast number of people over the border into Northern Ireland to go shopping. It could be argued that the UK is 'profiteering'.
France charges way less tax on alcohol etc than the UK, which drives people over the channel to go on booze cruises, should the French be forced to increase their drink excise levels ?
The 12.5% corporation tax rate applies to ALL companies in Ireland, it's not just applied to foreign direct investment. My own small business only pays that level of tax.
There are advantages and disadvantages to basing a company anywhere in Europe, it's all swings and roundabouts.
The City of London, as a financial market, is only as big as it is (was) due to the advantageous taxation and regulatory environment that exists in the UK. Perhaps the UK should employ German or French regulations and taxation policies instead? Surely it's grossly unfair on Paris and Frankfurt ?!
Where does one draw the line ?!
If you really want to go after tax evasion, perhaps it's time to ask why the UK allows a situation to persist where the Isle of Man and the Channel Islands etc are basically blatant tax havens used for channeling vast amounts of money and hiding incomes, yet are British crown protectorates etc.
Also, if the newspaper in question wanted to attack Irish corporation tax rates, they could have looked at 'brass plate' operations, not a company that has a very seriously huge Irish-based European HQ.
Anyone can do it
Big companies (with deep pockets) can move their business anywhere. They simply open an office, 'transfer' ownership of something nebulous and intangible like a brand and then use things like 'brand licensing' fees to extract money from one country as an expense to the place they want to pay corporation tax in - eg Ireland or a canton in Switzerland. The 'license fee' just absorbs all profit in the high-tax country. If you play this game enough then you end up being Enron.
On the other hand VAT is important for consumers, but not corporations (because they claim VAT back). So if you sell VAT items of less than £15 you pass them through the Channel Islands where VAT is not liable for competitive advantage, but so long as you're not at a price disadvantage choosing where to pay VAT may not be that important.
@ Robert Long
Frankly - why should companies pay corporation tax as its double taxation? Profits are taxed, and then the shareholders are taxed once again for the same earnings. Its why many small Ltd companies do not produce a profit in the first place as the money is removed as a salary by directors so that it only gets taxed once.
"British advertisers send their money to Google's Irish subsidiary, an arrangment described as unfair and unacceptable."
Described by whom?
I pay quite a bit of tax on my earnings from Google, as I'm sure do 100Ks of UK based publishers. Would be nice to see some real stats on Google's net gain to the UK economy, balance of payments etc but I suppose that level of difficult research is a little too much to expect in these days of shock-horror hyperbole. Anyone else remember when the Sunday Times used to be a real newspaper? I wonder how they'd manage to cobble a story together without Google.
Presumably Darling will be preparing knee jerk reactions as I type and a year from now I'll be paying tax in the US instead of here on this chunk of my income.
Thanks for the money suckers
You'll find that every Microsoft product sold in EMEA is sold from Ireland also Oracle and IBM.
.co.uk equals UK tax
Seems simple enough to me...
Income derived from the Google.co.uk domain should be liable to UK tax, regardless of where the operations are purportedly being conducted from. That from the .ie domain goes to the Irish. If Google choose not to play ball then Nominet suspend the .co.uk domain. Have a nice day!
Even the lefty favourite the Guardian offshores it's cash
Guardian Media group paid only 16% tax in the UK. last year. Thats a lesser rate than I did.
So just who are the tax avoiding spivs now Polly Toynbee?
Preachy rich sociaists - say one thing do another privately. Hypocrites!
Crash McIdiot - taxing us all unto and after death. well someones got to pay for Timney 's grumble flics I suppose.
"France charges way less tax on alcohol etc than the UK, which drives people over the channel to go on booze cruises, should the French be forced to increase their drink excise levels ?"
Nope! The government will just trash the value of the pound to negate any possible savings!
Not just Google
Lots of companies do it, my subscription to Microsoft TechNet goes through Ireland too.
Why have taxes anyway? Why don't we just put our earnings into a bank and let them take a 25-40% "tax" themselves. Would be much simpler particularly as most banks are now goverment owned! It would cut costs and clear the cr@p out of Whitehall, makes things simpler and prop the banks up!
Well it's a good idea if the banks weren't so fuck1ng useless!!!!! :)
rip off britain at hits best
"... Paying Irish corporation tax at 12.5 per cent rather than the 28 per cent it would face in the UK."
I'm not f..king surprised! 28 percent?!!!! Rip off britain at its best.
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