Boris Johnson comes to Google's defence over tax deal
As Google prepares to be grilled by members of parliament over its tax deal with HMRC, Boris Johnson has spoken out in defence of the Silicon Valley giant, arguing that it is “absurd” to blame the company for its tax strategies.
Google’s recent agreement to pay back taxes of £130m is unlikely to appease those angered by the fact that the company paid less than 3 per cent corporation tax over the last decade.
The deal has raised eyebrows among tax experts including The Tax Justice Network which has estimated that Google should be paying about £200m every year in corporation tax, based on the company’s declared profit margins and sales 2014 sales in Britain of £4.5bn.
Boris Johnson came to Google’s defence in his article in the Daily Telegraph in which he says criticising multinational corporations like Google, Apple and Amazon for minimising their tax bills was like “blaming a shark for eating seals".
The London mayor argued that “the problem does not lie with the firms" and said that the fault “lies with our national arrangements - our own system for not getting a fair whack from the tech giants."
Johnson praised Chancellor George Osborne for the back tax payment agreement however critics such as the Labour Party’s shadow chancellor, John McDonnell, have branded it as a “sweetheart deal”.
McDonnell said the agreement was “unacceptable when most people in this country pay much more".
Google told the Financial Times: “The way multinational companies are taxed has been debated for many years and the international tax system is changing as a result. This settlement reflects that shift and is in line with recent OECD guidance.”
The deal will allow Google to steer clear of the diverted profits tax and instead will pay tax on an element of future revenues from UK advertisers as well as on profits. However, the company will be able to keep taxes low by continuing to book advertising deals with UK clients through its international headquarters in Ireland.