Sunday, May 26, 2013
A taxing problem
I listened carefully to Eric Schmidt from Google yesterday when he was challenged on his company's tax avoidance policies and I was not convinced by his answer.
As reported here Mr Schmidt argued that the UK Government should stop complaining and change its laws so that Google was forced to pay its fair share of taxes. The corporation has only paid £10m to HMRC in the five years to 2011, despite generating UK revenue of £11.9bn.
Google argues that they legitimately channel their business through their Dublin office, where corporation tax is 12.5 per cent, compared with Britain's 21 per cent. And that is why Eric Schmidt's answer yesterday was a tad disingenuous. It is not a problem that a single government can solve, as he claimed.
He is right that Governments need to sort this out and that until they do then multi-national corporations will continue to minimise their tax bill and maximise their profits. What is needed is an international solution, but some sense of social responsibility from corporations such as Google would be welcome too.
As reported here Mr Schmidt argued that the UK Government should stop complaining and change its laws so that Google was forced to pay its fair share of taxes. The corporation has only paid £10m to HMRC in the five years to 2011, despite generating UK revenue of £11.9bn.
Google argues that they legitimately channel their business through their Dublin office, where corporation tax is 12.5 per cent, compared with Britain's 21 per cent. And that is why Eric Schmidt's answer yesterday was a tad disingenuous. It is not a problem that a single government can solve, as he claimed.
He is right that Governments need to sort this out and that until they do then multi-national corporations will continue to minimise their tax bill and maximise their profits. What is needed is an international solution, but some sense of social responsibility from corporations such as Google would be welcome too.
