back to article Five reasons why the Google tax deal is imploding

Today, the UK's tax deal with Google – or rather, corporate parent Alphabet Inc – looks worse than ever. Here's why. 1. Google avoids Osborne's 'Google Tax' Remember the Diverted Profits Tax? Announced in 2014, the DPT was designed to “deter and counteract” companies that “seek to avoid creating a UK permanent establishment” …

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        1. Lee D Silver badge

          Re: Think about it...

          "Which Countr(y)ies still give you decent interest on savings? Perhaps I could move mine there too?"

          If you are investing hundreds of billions, you get much better rates.

      1. Dr Stephen Jones

        Re: Think about it...

        @Lee D

        "Google has £100bn just sitting there. Earning interest... As tax, they could pay for roads, hospitals, police etc. rather than sitting as a number in a corporation account."

        That's not how it's done. The money is Google's property not the Crown's, and we stopped using "I want that, so I'll have it" that as a philosophical basis for seizing property when the Magna Carta was signed.

        What we need is a fair and efficient tax system. Not backroom deals.

    1. Brewster's Angle Grinder Silver badge
      Holmes

      Re: Think about it...

      Well Google's profits comes from advertisers. But okay, that ultimately comes from consumers. Still, faced with lower rates of corporation tax do you think companies would (a) pass on the savings to customers, through lower prices, or (b) pass on the savings to their shareholders as higher dividends?

      A two pipe puzzle, that one.

    2. Voyna i Mor Silver badge

      Re: Think about it...

      No, sorry, you are wrong. Corporation tax is charged on profits that have already, as it were, been banked. It comes out of shareholder dividends or remuneration-committee voted boss pay. What makes you think for one microsecond that if a company did not have to pay corporation tax, it would cut prices next year?

      You will be telling me next that if we did not have to pay VAT, shop prices would drop by over 16%.

      1. Charles 9 Silver badge

        Re: Think about it...

        Maybe not 16%, but SOME appreciable amount. Otherwise, one of the many other businesses that would also benefit from the tax cut would decide to use the new leeway to undercut the competition. Competition is what keeps companies honest since they can't keep their prices high without risking losing business.

        1. Brewster's Angle Grinder Silver badge

          Re: Think about it...

          Not every sector of the economy is overflowing with competition. The grocery sector is pretty cut throat, at the moment, but there's almost a monopoly when it comes to selling adverts on internet search results..

        2. anothercynic Silver badge

          Re: Think about it...

          Ummmmm... no.

    3. Graham Cobb

      Re: Think about it...

      Eh? Tax isn't about taxing some piece of money, it is about taxing transactions. Otherwise, every time the government printed a pound it could only tax it once!

      Of course we paid tax when we earn't the money, then paid tax when we spent it, then the company needs to pay tax when they earn it and should also pay tax when they spend it (in fact, companies do not -- mostly they pay tax only on profits, apart from employers NI and some transaction costs, but certainly not on revenues). And the shareholders and employees get taxed when they receive it, and round we go again. That is how tax works.

  1. Voyna i Mor Silver badge

    Osborne's future

    Now he won't be PM because people realise that he really is just plain nasty, he needs to ensure a future role as a consultant to Google. I suspect Cameron is eyeing up something similar for Facebook as that's all about PR.

    1. Flatpackhamster

      Re: Osborne's future

      He's just as bloody useless and nasty as Gordon Brown, which is hardly surprising when you consider he's been using Gordon Brown's taxing and spending spreadsheets since 2010.

      1. Blank-Reg
        Mushroom

        Re: Osborne's future

        Austerity? What austerity. See, if Labour had some sort of a clue between them, shredding the current government would be a piece of piss. Just focus on the mess Osbourne is making with the country's finances and hammer home his continued hamfisted attempts at running the exchequer. Instead you end up with that dinosaur Corbyn and his entryist Militant Momentum cronies focusing on trivia, obsessions with the spare room subsidy, and generally trying to "Draw lines" whatever that means.

        In related news, HMRC hopes to rake in a few million in grabbing the odd person making a tiny income on fleabay. As they say, it's not what you know, it's who you know (and can bribe)...

  2. Arctic fox
    Headmaster

    "It isn’t just the innumerati - Richard Murphy, Prem Sikka, Russell Brand, the Corbynite Left"

    Actually Andrew there are plenty on the "Corbynite Left" who are perfectly capable of counting without having to take their shoes and socks off to get above twenty who have made very clear their dislike of this "deal" without out resorting to criticisms that you would be likely to characterise as "hard left". It has indeed attracted well merited and clearly expressed criticism across the whole political spectrum (I am very glad to say). All you are doing with that kind of comment is giving the impression that you are paying obeisance to the Daily Fail and their like, something which I am very certain is not an impression that you wish to give. What is the problem with admitting that your feelings about this deal are also shared on the Left without making snide remarks? God help me, I even agree with Tories sometimes - not very often, but it has been known to happen. :P

    1. Boris the Cockroach Silver badge
      Flame

      Re: "It isn’t just the innumerati - Richard Murphy, Prem Sikka, Russell Brand, the Corbynite Left"

      Chatting to my boss today (and hes the sole owner of the business) he utterly hates this google tax deal, and hes the sort of right wing nutter who'd vote tory no matter what insane policies they had.

      Why does he hate it? and the small/medium businesses we supply hate it?

      BECAUSE THEY HAVE TO PAY FULL CORP TAX ON THEIR PROFITS BECAUSE THEY ARE UK BASED.

      They cant avoid it, if they try delaying paying it, inland revenue tends to turn up with menaces.

      And then the tories let google off by paying a pittance on what they really owe.

      Perhaps I should go self employed and base myself in the Cayman islands.. and see if the government will cut me a nice deal that means I only pay 10% tax on my income instead of the 35% or so that gets demanded....

      1. Anonymous Coward
        Anonymous Coward

        Re: "It isn’t just the innumerati - Richard Murphy, Prem Sikka, Russell Brand, the Corbynite Left"

        Why not go whole hog and MOVE to the Cayman Islands physically and just deal with all your UK customers via Internet?

      2. Marketing Hack Silver badge
        Stop

        Re: "It isn’t just the innumerati - Richard Murphy, Prem Sikka, Russell Brand, the Corbynite Left"

        Agree with the above. The biggest problem is that tossing Google a softbball the British government is essentially subsidizing Google and penalizing other business in Britain.

      3. Arctic fox

        Re: "It isn’t just the innumerati - Richard Murphy, Prem Sikka, Russell Brand, the Corbynite Left"

        Indeed Boris, this exactly the kind of response I have been hearing from people who could not remotely be described as leftwing.

  3. Anonymous Coward
    Anonymous Coward

    Seriously what did you expect, you voted them in

    Any political party that proudly calls itself thieves (Tory=irish bogtrotter=bandit) is of course going to live up to their name, so don't whinge you voted for them.

    1. Graham Marsden

      Re: Seriously what did you expect, you voted them in

      I suggest, AC, that you go back and look at the last lot of election results, because you'll see that the majority of us *DID NOT* vote for them, they got about 37% of the votes which was actually only 24% of the electorate.

      The fact is that the Tories only got around 600,000 more votes than they did previously, but because of our broken electoral system, that was somehow parlayed into a "majority".

      Until that gets fixed, we're going to keep getting Buggins' Turn governments with no actual change happening.

  4. Anonymous Coward
    Anonymous Coward

    French Employees could be happy...

    If gouv.fr manage to up the taxes Google pays in France then the pot of money towards any employees "participation" (a kind of French profit share) is going to soar!

  5. Anonymous Coward
    Anonymous Coward

    If I was king I'd probably scrap corporation tax altogether in favour of something harder to avoid. At the moment businesses fall in to two categories, those so small they can't avoid it and those big enough to. If you are small enough to not be able to avoid it you can usually arrange it so the amount you pay is relatively small by the use of judicious spending and claw back from years where you made a loss. As a tax it just doesn't really work very well.

  6. allthecoolshortnamesweretaken Silver badge

    Okay, so how do I get Osborne to do my taxes as well?

  7. Paul Hovnanian Silver badge
    Facepalm

    'Google argues it has “no fixed base” in the UK, despite employing thousands of staffers in London alone.'

    That could change pretty quickly. Be careful what you wish for.

  8. Dave 15 Silver badge

    Suits me....

    I will send HMRC my profits in terms of fractions of a google profit... then send the odd shaving off a penny piece for my tax.

    Good enough for the rich goose its good enough for this poor gander.

    Our law seems all based around precedent so this should be fine

  9. Anonymous Coward
    Anonymous Coward

    You are aware that Cameron is only an advertising executive in sheep's clothing?

    He must be in thrall to Google's success.

  10. Curly4

    A solution to not only the tax problem but also for the state budget also. What would happen to the companies that don't pay their taxes if that company suddenly become a state owned? I think after a couple of companies became state owned the rest of the companies would be a little more reasonable, and with the profits from those companies would help the budget while not destroying the ability of the company to do its business.

  11. Martin Summers Silver badge

    How many of us if we had enough money to be worried about such things as higher rates of tax, would try to do anything they could by any legal means there were available to keep as much of that money being taken away from them as possible? Until you've been in that position yourself don't criticise a company run by real people trying to do the same. If they tighten up the laws then they'll have to obey, right now they've done nothing wrong.

    1. Graham Marsden

      @Martin Summers

      You fail to comprehend the scale of what is going on.

      This isn't just a matter of a few thousand quid here or there, it is money running into the millions and billions. At what point do you say "hmm, actually I think having enough money to buy a small country, is sufficient..."?

      1. Martin Summers Silver badge

        Re: @Martin Summers

        I comprehend all right. I'm just saying how easy it is for people to criticise right now when they would probably do anything within their power to keep their own cash rather than hand half of it to the tax man. As someone pointed out further up, they aren't doing anything illegal, our laws allow them to do this and they've been doing it a lot longer than the tories have been in power too.

    2. Roo
      Windows

      "How many of us if we had enough money to be worried about such things as higher rates of tax, would try to do anything they could by any legal means there were available to keep as much of that money being taken away from them as possible?"

      Life isn't perfect in the UK by any means, but I do feel somewhat privileged to have grown up and now raise a family in the UK having seen some of the alternatives on my travels. I want more people to have the same chance at a prosperous peaceful life that I had, which requires a lot of money, which requires a lot of tax to be paid. So I don't resent paying a full portion of tax, after all it *should* go towards making the lives of our kids & the folks around us better - which *should* make us all better off.

      Tax avoidance is simply a way of gaining an unfair advantage over your team mates.

    3. David Beck

      You mean like RBS?

  12. Paul 76

    Someone seriously thinks ITVs advertising business and Googles are comparable ?

  13. TheDillinquent

    Are HMRC above the law?

    No. So why are they not being investigated by the Fraud Squad? After all they are colluding with Google/Apple/Amazon etc. to defraud the taxpayer.

  14. Captain Badmouth
    Devil

    HMRC tax site scripts/trackers

    If one proceeds to https://www.tax.service.gov.uk/account/sign-in?continue=/account, one finds that google-analytics has a script and a tracker on the pages. How nice to know they're so interested in my tax affairs, and how nice of hmrc to allow it.

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