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UK MP wants to bring Google in front of Committee over tax avoidance

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British MP John Mann has publicly criticized Google for only paying £6 million in taxes on its £395 million in earnings in the country. Google avoids paying taxes through a complex system that sees Google UK hired as an agent through Google Ireland, and much of its UK earnings sent to Bermuda as a licensing fee.

google uk logo stock 1020
google uk logo stock 1020

Just two months after a UK investigation into Google’s mishandling of Street View data was re-opened, the company is facing criticism of a different kind. John Mann, British MP and member of the Treasury Select Committee, had harsh words for the company’s £6 million (about $9.4 million) tax bill on £395 million (about $619 million) in earnings, reports The Independent. Mann called Google’s (completely legal) tax avoidance scheme “entirely improper and immoral,” adding that he thinks “it would be highly appropriate to pull a Google executive in front of the Committee to justify their failure to pay proper taxes… sometime before Easter, realistically.”

The Telegraph describes a system whereby, in order to minimize Google's tax expenses, Google UK is employed by Google Ireland, which ultimately receives the cash from Google’s UK sales. Much of the money is then sent as a licensing fee to a firm in Bermuda, a nation well-known as a tax haven. However, since there's nothing illegal about what the company is doing, its shareholders are likely to find any extra tax expense unappealing — a point Eric Schmidt not-so-tastefully made last year by saying, "to go back to shareholders and say ‘We looked at 200 countries but felt sorry for those British people so we want to [pay them more]’... there is probably some law against doing that."

Google's UK tax practices were first called into question in 2010 when its "Double Irish" and "Dutch Sandwich" income shifting and resulting 2.4 percent effective tax rate were put under the spotlight. In response to Mann's most recent criticism, Google issued the following statement:

"We make a substantial contribution to the UK economy through local, payroll and corporate taxes. We also employ over a thousand people, help hundreds of thousands of businesses to grow online and invest millions supporting new tech businesses in East London. We comply with all the tax rules in the UK."