American internet giant Google is facing calls to pay appropriate tax after it was revealed that the company used legal tax-avoidance measures to pay just £6m in tax last year, on a turnover of some £395m.
Now the news of Google's tax avoidance has sparked a petition which attracted some 40,000 signatories in just a few days.
Google uses a variety of complex measures to avoid paying tax to the UK Exchequer. All the mechanisms and techniques are entirely legal and are consistent with UK tax law.
However, in these times of austerity large businesses and individuals who avoid paying tax have found themselves the subject of harsh criticism from pressure groups and members of the public.
This summer, comedian Jimmy Carr was identified as belonging to a group which conducts aggressive tax avoidance measures. He was forced to apologise and revealed that he had instructed his accountants to change his tax affairs.
Campaigners claim that the fact that major companies like Google can pay so little tax highlights the ineffectiveness of UK tax law.
David Talbot works for campaign group 38 Degrees which is coordinating the online petition.
"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," he told The Independent.
"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," he added.
It is thought that Google uses its UK Division in order to sell products on behalf of their Irish counterpart. All of the proceeds of sales go to Ireland, with the UK company receiving an income equivalent to a 10% commission. The £6m tax fee is based on this 10% commission, less costs.
The vast majority of revenue generated by sales in the UK then goes via Google Ireland to Google Bermuda, an offshore tax haven.
A spokesman for Google 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."
Source:
Petition launched as anger mounts over Google tax avoidance in the UK (The Independent)
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