Google tax deal: MPs launch inquiry after criticism of £130m settlement

A Google search screen … Andrew Tyrie, chair of the Treasury select committee, said UK tax law had become too ‘elastic’. [Image: Nick Ansell/PA].

The possibility of corporations being taxed on turnover – all the money they take – rather than just profits is one that was suggested on This Blog by a commenter, only a short while ago.

Considering the fact that Income Tax is calculated entirely on our turnover, and not on any profit we make on our earnings (what profit?), this seems an entirely sensible idea. Hopefully that reader will come back and explain the thinking further.

Meanwhile, your thoughts are invited. Will this help bring balance to UK taxes? Will it highlight the disappearance of our large corporations over the decades since neoliberalism became the dominant political ideology in the UK?

Or will it be a whitewash?

MPs have launched an inquiry into the UK’s tax system after the government was accused of allowing Google to pay too little in a £130m deal.

The House of Commons Treasury committee announced that it would examine whether a radical shakeup of corporation tax was needed, amid concern that Google has been allowed to get away with an effective rate of 3%.

The inquiry is not directed at Google, but will investigate the UK’s shrinking corporate tax base more widely and whether HMRC is doing enough to tackle avoidance.

It will ask whether there needs to be a radical shakeup of the system, and whether business taxation could be based on turnover rather than profits.

Source: Google tax deal: MPs launch inquiry after criticism of £130m settlement | Business | The Guardian

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3 thoughts on “Google tax deal: MPs launch inquiry after criticism of £130m settlement

  1. David Woods

    HMRC doing enough to tackle avoidance!
    Looks more like they are actively aiding and abetting on behalf of their political masters!

  2. Jonathan Wilson

    The problem with a turnover tax is that it will just be passed on, just like VAT, in the prices which will simply be marked up by the equivalent amount.

    Its quite possible, I feel, to change the tax laws so that CT is applied to a fairer and more simpler version of what is considered “profit” and that is to exclude shams such as “transfer pricing” or “loan repayments” on loans given by the same (or parent) company that also owns the company that is paying back interest on the loans; it gave to its self.

    The other possibility is to tax the declared profits, used for divi’ payments, based on the proportion of sales generated in the location of the people purchasing (not invoicing). So if a company like google declares 40 billion profit, of which 8 billion is within the UK, then google simply pays 20% on that figure and the money is taken from the declaration prior to it going to the shareholders.

    The advantage of the “after declaration” CT is that a company wouldn’t be able to base its tax on “profit” then pay the shareholders based on a different amount of “profit” based on share price and actual profit. Then again, I’ve always found stock market shares and prices to be a strange beast, where a company can potentially loose money every year and yet has an increasing share price with divi’ payments every year – like one giant legal ponzi scheme.

  3. Dez

    The turnover idea was promoted by your member Gary Aronsson back in December which I totally agree will totally screw up their intercompany corporate and statistical accounting fudges to artificially deflate their profits off shoring to light taxation countries. What was really upsetting was finding that much smaller contributor Google France is getting clobbered by French tax authorities for a massive “contribution” from Google far far in excess of the UK charity amount that our pathetic tax authorities managed. Feels like our tax boys ought to get out a bit more and find out what is going on in the real world not molly coddling up to these chancers taking the micky out of the weak systems that countries have let happen. Turning a blind eye to these Company tax schemes may encourage them to invest money and jobs but not to the point that the poor have to bail out the country coffers.

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