John Oliver, host of the irreverent HBO series, Last Week Tonight, called out a number of companies, including Google, about not paying corporate taxes in the US.
A common critique of Google, and frankly most major multinational companies, is the reliance on loopholes to reduce international taxes. The same process occurred in 2016 with tax shelters saving Google at least $3.7 billion in taxation.
A French court has ruled against the country’s own tax authority, and decided that Google need not pay a €1.11B ($1.27B) tax bill. Although the ruling so far applies only to Google and only in France, it sets a precedent that could influence other cases in Europe.
The French government took the view that when Google sold ads to French companies, that revenue was earned in France, and was subjected to taxes there. Accordingly, it sent the company a bill for almost $1.3B, covering ads sold in the country between 2005 and 2010, down from an earlier demand for €1.6B …
Following a settlement with Russia last month over Android pre-install restrictions, Google has agreed (via Reuters) to pay Italy €306 million in unpaid taxes from 2002 through 2015.
Update: The financial prosecutor’s office has confirmed that the raid took place, and is part of an investigation in to tax evasion and money laundering. As reported by Reuters:
The investigation, which started in June last year, aims to verify whether Google Ireland Ltd (GOOGL.O) has failed in its fiscal obligations in France, the prosecutor’s office said in statement.
According to several breaking news reports, Google’s headquarters in Paris are being raided this morning by French investigators as part of a probe into the US company’s tax payments. Both Le Parisien and Reuters were informed by sources that a search is underway at the HQ in Paris’s 9th district.
TNW reports that the European Commission is pressing ahead with proposals to make Google News pay a fee for linking to news stories on the web. The EC says that as search results include a short excerpt from the piece, and that text is protected by copyright, Google must pay.
Three European countries have tried this, and it failed in all three. In Spain, Google simply decided to close Google News in that country, and news websites lost 10-15% of their traffic overnight. Spanish publishers – who had originally demanded the law – quickly realized their mistake and tried to pass a new law that would somehow force Google to return …
A tax dispute between Intel and the IRS currently headed to the appeals court could set a precedent that would see Google’s parent company Alphabet reclaiming $3.5B in tax benefits – more than all the tax the company paid last year. The WSJ reports that Google is one of a number of tech giants following the case closely.
The case, which the IRS appealed to the Ninth U.S. Circuit Court of Appeals last week, is being closely watched in the tech industry and elsewhere. At least 20 companies, including Microsoft and eBay, have disclosed they’re monitoring the outcome of the case involving share-based compensation.
In essence, the case hinges on share compensation packages paid by overseas subsidiaries. The IRS says that the cost of these should be offset against the expenses of the overseas companies; Intel says no, the cost should be deducted by the U.S. parent company – reducing its tax liabilities in its home country.
The IRS introduced the rule in 2003. Companies like Google have abided by the rule but reserved the right to reallocate costs if a court ruling went against the IRS, giving them a huge potential windfall.
Google has recently come under fire for its tax arrangements in Europe, a $185M back-tax deal in the UK being described as “disproportionately small” and possibly illegal. France is currently seeking to claim $1.76B from the company in back taxes.
Photo: Reuters
Just one day after the UK’s public spending watchdog described the £130M ($185M) back-tax paid by Google in the country as “disproportionately small,” France is demanding a rather larger sum. Reuters reports that the country’s finance ministry believes Google owes €1.6B ($1.76B).
“As far as our country is concerned, back taxes concerning this company amount to 1.6 billion euros,” the official, who spoke on condition of anonymity, said […]
Earlier this month, Finance Minister Michel Sapin ruled out striking a deal with the U.S. search engine company as the British government recently did, saying the sums at stake in France were “far greater” than those in Britain …
The Public Accounts Committee, the British Parliament’s public spending watchdog, has criticized the £130M ($185M) tax deal Google struck with the UK government as “disproportionately small.” The committee also criticized the secrecy around how the sum was calculated, reports the Guardian.
Google’s controversial tax deal cannot be properly assessed by MPs because of secrecy surrounding the negotiations, according to a report by parliament’s public spending watchdog. But the deal to pay £130m in back taxes for a 10-year period seems “disproportionately small when compared with the size of Google’s business in the UK”, the public accounts committee has found.
A report published today calls for more to be done to prevent “aggressive [tax] avoidance” by multinational companies, with Google accused of hypocrisy …
The European Commission says that the £130M ($185M) tax deal struck between Google and the UK government may amount to “illegal state aid” by offering the company better terms than those available to smaller businesses.
Google first came under fire for its tax arrangements in the UK in early 2013, when it was accused of funneling profits from UK Adword sales through Ireland, resulting in the company paying just £6M ($8.5M) tax on a turnover of £395M ($565M). In the new deal, it agreed to change its accounting practices to pay more tax in the UK, and to pay a lump sum in back tax …
Google has struck a deal with UK tax authorities to pay £130 million in back taxes. The move comes after a six year investigation by the British government and recent increasing clamp-down on tax avoidance by multinational companies.
Lobbying group Citizens for Tax Justice has called out Google, Apple and Microsoft and others for what it described as “accounting tricks” in which companies “pretend” to be based overseas for tax purposes. The claims were made in a report entitled Offshore Shell Games 2015.
Many multinational corporations use accounting tricks to pretend for tax purposes that a substantial portion of their profits are generated in offshore tax havens, countries with minimal or no taxes where a company’s presence may be as little as a mailbox. Multinational corporations’ use of tax havens allows them to avoid an estimated $90 billion in federal income taxes each year.
Google’s overseas tax arrangements came under fire in the UK back in 2013 when it was revealed that the company paid just £6M ($9.4M) on a UK turnover of £395M ($620M), claiming that all its advertising sales were made by staff in Ireland (a claim later challenged) …
The roof terrace of Google’s London HQ
New corporate tax measures aimed at preventing multinational companies making profits in the UK and then shifting them overseas where they incur lower taxes could potentially impact a number of tech companies, including Google, Apple and Amazon.
Dubbed “the Google tax,” the British government announced a new 25% tax on profits generated in the UK and then “artificially shifted” overseas, reports the BBC … Expand
Expanding
Close
Members of the UK government are seeking to close a tax loophole that currently allows online music, app, and book downloads to avoid the country’s 20% “value added tax” in favor of much lower international tax rates, reports The Guardian. If the push is successful, Google Play customers in the UK will instead be taxed at the appropriate rate for their own country.
However, the new law won’t go into effect until January 1, 2015, so there’s still time for things to change. Supporters of the change say that it will lead to more fair competition among foreign and domestic companies, since UK-based companies are currently at a major disadvantage due to the higher tax rate.
In the latest in our Talking Schmidt series, Google exec chairman Eric Schmidt has told the BBC that he is “perplexed” as to why anyone should debate why a company that “tries to do the right thing” would route all its UK adword sales via Ireland to halve its tax bill.
What we are doing is legal. I’m rather perplexed by this debate, which has been going in the UK for some time, because I view taxes as not optional. I view that you should pay the taxes that are legally required. It’s not a debate. You pay the taxes … Expand
Expanding
Close
In the fifth installment of our continuing series Talking Schmidt we bring you the most insightful lines from Google Chairman Eric Schmidt.
Schmidt, who is promoting his new book The New Digital Age with his coauthor Jared Cohen, responded to UK politician Ed Miliband’s call for “responsible capitalism” earlier this week.
He reminded Miliband that Google is a country… ahem, company powered by profit and projects like wearable computing and self-driving cars better serve Google than forfeiting more of its profits to various governments.
“Google is a capitalist country … company,” he corrected himself, to laughter from the audience. “It’s easy to say you would like us to have to have less profits and have that somewhere else. We will comply with the letter of the law, but we’re trying to avoid being doubly and triply taxes, which would prevent us investing in some of the wilder things we do.”
Update: A report on Yahoo! Finance claims that Google paid just 2.6 percent tax on its $6b of overseas profits in 2012.
Google, one of a number of companies to come under fire for alleged tax-avoidance practices, says that it welcomes debate on how international tax treaties can be reformed so that multinational companies pay the right amount of tax in each of the countries in which they operate.
In a comment piece on the Observer UK newspaper website, Google Chairman Eric Schmidt says he understands the controversy.
At a time when families are having to tighten their belts and funding for vital public services is under pressure, corporate taxation is rightly a hot topic. And as a company that has always aspired to do the right thing, we understand why Google is at the centre of that debate. In the interests of moving the argument forward – away from accusation and toward action – here are three principles we hope most people can agree upon … Expand
Expanding
Close
The United Nations is considering a new internet tax for U.S. websites and content providers including Google and Apple, according to leaked proposals from the European Telecommunications Network Operators Association:
The United Nations is considering a new Internet tax targeting the largest Web content providers, including Google, Facebook, Apple, and Netflix, that could cripple their ability to reach users in developing nations…The European proposal, offered for debate at a December meeting of a U.N. agency called the International Telecommunication Union, would amend an existing telecommunications treaty by imposing heavy costs on popular Web sites and their network providers for the privilege of serving non-U.S. users, according to newly leaked documents.
Amazon Affiliate members in California got a rude awakening this morning when they received and email from Amazon telling them that all Affiliate programs would be terminated by September 30th. This is in reaction to a proposed CA law that would tax Amazon purchases because Affiliate Account holders (workers) live and work in the State.
The whole thing is up for debate but we found the last sentence in the letter (whole thing pasted below the fold):
We are also working on alternative ways to help California residents monetize their websites and we will be sure to contact you when these become available.
We noted yesterday that Amazon was getting their own ad network, which would go head to head with Google and others. Expand
Expanding
Close