A petition demanding that Google pays its “fair share” of tax has attracted nearly 40,000 signatures in just two days as anger over the internet giant’s avoidance of tax in the UK grows.
The petition began as a direct reaction to revelations which emerged this week showing that Google paid the Exchequer £6m on a turnover of £395m last year.
The company used a complicated series of mechanisms – all entirely legal - to ensure that much of its profit ended up being channelled from the UK and Ireland to the tax haven of Bermuda, which ensured it paid the minimum amount of tax possible.
Campaigners say the move calls into question the moral value of such schemes, as well as the efficacy of British tax law.
“Our members have said that they want the government to crack down on tax avoidance, there is a moral component to these issues, especially when the country is facing huge cuts, they are taking the mickey,” said David Talbot of campaign group 38 Degrees, which set up the petition. He added: “Sometimes we need to lobby government, sometimes we need to lobby individual companies, this time we want to say to Google: it is time to front up.”
Google supporters point out, however, that it provides jobs to the UK and funds projects which help British businesses grow.
Richard Murphy, a tax expert with Tax Reearch UK explained that Google uses its UK company as an agent to sell products on behalf of its Ireland division.
The bulk of the proceeds of the sales go to Ireland, while a commission – understood to be around 10 per cent - remains in the UK and is taxable, less costs. Google Ireland then pays a portion of the cash to Google Bermuda as a licencing fee, ensuring that a large portion of Google’s profits find their way to the tax haven.
A Google spokesman said: “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.”