A former employee for Google by the name of Barney Jones recently came forward to say that the search giant cheated British tax laws to avoid paying higher taxes. Jones, who worked for Google from 2002-2006, is saying the London sales staff would secure ad deals locally but close them in Ireland where the tax rate was nearly half that of the U.K. rate.
Many technology companies have been under investigation in the U.K recently for taking advantage of numerous tax loopholes. One in particular is using Ireland’s lower corporate tax rate where many of the tech companies would book their revenues. Currently the U.K. corporate tax rate is 23% as compared to Ireland’s substantially lower 12.5% rate.
This recent information came to light just after members of Parliament’s House of Commons Public Accounts Committee (PAC) questioned Google executive Matt Brittin, over the company’s advertising practices in the U.K. and Ireland. Committee Chairman Margaret Hodge was even as bold to call Google “unethical” and “evil” for their supposed actions. “You are a company that says you do no evil," Hodge said. " I think that you do do evil. You use smoke and mirrors to avoid paying tax.”
Labor leader Ed Miliband said that Google was guilty of “corporate irresponsibility” for making it look as if Ireland was where the sales took place. However, Brittin testified that all sales actually took place in Ireland and that no laws were violated when advertising deals were made in the U.K.
Managing Director of Google U.K., Matt Brittin
The investigation being conducted by British MPs into Google’s advertising sales practices came to light after many anonymous whistleblowers notified authorities on how the company was supposedly operating. Some of the evidence submitted was a sales slip showing where personnel were paid substantial bonuses when they were able to secure large sales. Evidence also points out that most sales were done in the U.K. and particularly with larger clients, which include the likes of Amazon, Ebay, Halifax, and British Airways to name a few.
According to Mr. Brittin, Google’s largest base of operation is in Dublin, Ireland. That one headquarters is said to employee over 3000 people and conducts some 99% of all advertising business is done through Dublin. Nevertheless, Brittin suggested that the mere 1% of sales account for nearly thrree quarters of Google’s U.K.-based advertising revenues.