Google, in common with other technology companies such as Amazon and Facebook, is a difficult business for individual tax offices and legislators to understand. In the case of Google, the business is headquartered in North America but it is a global business with exposure to almost every country and region around the world. How should a business be taxed on revenue generated around the world, when the business does not subscribe to country boundaries as a more traditional business might? This is a problem that has plagued governments around the world for the last few years, with individual governments taking a different approach and stance as to how Google should be taxed for revenue generated.
In the case of Europe, Google is facing numerous investigations into how the business operates across all aspects – from the search engine to tax paid. Sundar Pichai has been talking to the German newspaper, Welt am Sonntag, and defending Google’s policies and practices, especially when it comes to the accusation that the company does not pay enough taxes. Sundar explained that Google has heavily invested in Europe and employs around 14,000 employees. He went on to discuss how the business has to navigate the tricky waters of international tax laws, where different countries have different priorities. His comments included: “Based on the structure of existing tax law, most companies pay the bulk of their taxes in their home countries.” This of course refers to Google paying most of its taxes into the American economy. Sundar explained that Google followed these existing laws and that governments would have to take action if they wished for more tax revenue to be collected in their domestic market. His remarks alluded to the global tax system needs an overhaul.
When Sundar was asked about the British exit from the European Union following the late June referendum, his comments were carefully worded. He explained that it was already a challenge for a multinational company “to come to terms with different laws and regulations in each country” and that a “unified digital market” has been and will continue to be important for the European continent. Should the United Kingdom break up with the European Union, as appears set to happen, this would increase the complexity and this in turn could lead to less incentive for Google to invest into Britain. These sentiments have been echoed across much of the business community: Google, in common with many other multinational businesses, appears to not want to say that it is a terrible idea for the UK to leave the European Union but is instead explaining how it will make business harder in the years to come.
Google already has a difficult relationship with the European Union as there have been a number of antitrust complaints leveled at the American business, where the business is being accused of taking advantage of its market dominance with certain technologies and of squeezing competitors out. Sundar has hit back, explaining that Google’s Android is one of the most open operating systems ever created, but this debate appears set to rage on for several years.