Margaret Hodge condemns Google for ‘obscene’ tax avoidance

Veteran MP calls search giant 'arrogant' after its parent company Alphabet revealed an effective tax rate of only 5% in the final quarter of last year

Michael Bow
Wednesday 03 February 2016 01:56
Dame Margaret used to chair the Public Accounts Committee
Dame Margaret used to chair the Public Accounts Committee

A leading critic of multinational tax avoidance schemes has condemned the web giant Google as “completely obscene” after the world’s most valuable company said it slashed its global tax rate by three-quarters last year.

The veteran MP Dame Margaret Hodge called the search giant “arrogant” after its parent company Alphabet revealed an effective tax rate of only 5 per cent in the final quarter of last year. She famously told Google’s European boss “I think you do do evil” when she was chairing a Public Accounts Committee hearing into its controversial UK tax affairs in 2013.

Google’s tax rate fell to 5 per cent from 18 per cent in the last quarter of 2014 thanks to a series of research and development tax breaks.

The move spurred the business to quarterly net profits of $4.9bn (£3.4bn), up from $4.7bn in 2014, on revenues of $21.3bn. UK sales accounted for $1.9bn – or nearly 9 per cent – of these revenues, and were up 16 per cent on 2014.

The results helped Alphabet – now worth $550bn – overtake Apple as the world’s most valuable firm after its shares soared 5 per cent to $789 in afternoon trade in New York.

“It’s completely obscene. They are so arrogant in spite of public anger, it belies common sense. It’s disgusting,” Dame Margaret said.

She urged the UK Government to adopt a tougher approach on its taxation by following France, which is negotiating a larger tax settlement with the Google. The firm last month struck a controversial “sweetheart” deal with the Government to pay only £130m of back taxes on a decade’s worth of UK profits.

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