Google Inc (GOOG) is an Artful (Tax) Dodger, Says U.K. Report

Google Inc (NASDAQ:GOOG) just can’t seem to get in the good graces of people in authority in Europe. Whether it’s being investigated for possible monopolistic business practices to issues with user data and privacy, to whether the company pays the “right” amount of taxes, it seems that while European consumers generally like Google and its services, the authority figures and bean counters there have a hard time with the Google business model.

But it seems that Google Inc (NASDAQ:GOOG) could be shining a light on some things in a similar fashion that Apple Inc. (NASDAQ:AAPL) CEO Tim Cook did on the U.S. tax system when he spoke before Congress late last month. As  a very large multinational company, Google is extremely visible to where many media, government figures and consumers (not to mention shareholders and investors) keep a close eye on the company’s doings. So when Google has a chance to speak about something, it will get attention and draw attention to that issue. And it seems that the purpose now is for Google to present to the public the flaws in the European Union and U.K. tax codes that the legislators put in place.

But Google Inc (NASDAQ:GOOG) will have an uphill battle in the PR wars with the U.K. government, as it released a report Thursday that rips Google for avoiding taxes, making claims that the company’s complex corporate structure does not do anything other than help the company skirt around the tax laws. Google pays taxes in Ireland, where its U.K. base is, and that country has the lowest corporate tax rate in the entire EU at less than 13 percent. By taxation rules, Google maintains that all of its sales go through the Ireland office, and the Google staffers in other parts of the U.K. do not conduct sales roles for the company.  However, the U.K. government was citing an expose done by Reuters that seemed to give evidence that Google was indeed conducting sales outside of Ireland, which means that Google should be subject to more taxation in the U.K. Due to the rules in place, it was reported that Google paid only 0.1 percent of its U.K. revenue in total taxes, which would have been in the range of about $15 million.

So what did the report say, exactly?

The report’s chief author, Margaret Hodge, head of the powerful Public Accounts Committee in Parliament, wrote, “Google brazenly argued before this committee that its tax arrangements in the U.K. are defensible and lawful. … (But the) argument is deeply unconvincing and has been undermined by information from whistleblowers, including ex-employees of Google, who told us that U.K.-based staff are engaged in selling.”

In response, Google Inc (NASDAQ:GOOG) said it was in support of a fairer and more clear tax system, but said in a statement, “As we’ve always said, Google complies with all the tax rules in the U.K., and it is the politicians who make those rules. It’s clear from this report that the Public Accounts Committee wants to see international companies paying more tax where their customers are located, but that’s not how the rules operate today.”

What are your thoughts about this? Is Google Inc (NASDAQ:GOOG) operating according to the law, or is it truly a tax dodger? Give us your feedback in the comments section below.

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