The international Tax Justice Network unveiled the results of a recent investigation on Google’s UK operations, landing on an estimate of somewhere around £1.5 billion (nearly $2 billion) in dodged taxes, enough to pay some 60,000 nurses for a year.
That figure is based on the assumption that 9% of Google’s total annual revenue comes from its UK operations, a bit of data that hasn’t been on Google’s reports in the area since 2017. This projected tax liability is a far cry from a mere £67 million, the amount Google reportedly paid in the UK for 2018.
Google often runs afoul of global tax authorities, with many claiming that it illegally uses tax havens to divert revenue to operations centers with lower tax rates. Revenue figures for UK operations were reported as £1.4 billion last year, on the upswing from last year’s claimed £1.26 billion.
The ledger claims that those amounts come from research & development work that happened in the UK, as well as “marketing services” provided to outside firms. Tax Justice Network used other Google data to estimate that somewhere in the area of £9.7 billion would be a more realistic claim, if it included revenue from Google’s core advertising business. With reported costs, this would leave a taxable profit figure of £8.3 billion. This figure would produce the aforementioned £1.5 billion in estimated taxes.
Authorities in the UK and EU have been especially ardent about making sure that Google and their ilk pay their fair share. Shadow Chancellor John McDonnell did not mince words on the matter, making it clear that Labour is looking to step up enforcement and make sure that global tech giants like Google pay their fair share of taxes.
This is a matter dear to the heart of the party; promises to address the problem and “close down loopholes” even made it into the manifesto. “A Global Britain” sets the tone for a party that seeks to close up income inequality, among other things, and taking on tax evasion by multinationals fits perfectly into that set of goals.
Google is no stranger to exactly this sort of enforcement, so it’s anybody’s guess as to just what kind of laws the party plans to enact in order to shake up Google’s usual brand of “creative accounting”. The company has been accused of funneling money into ‘tax havens’ with a lower tax responsibility than the places it’s actually doing business, among other practices.
To battle these sorts of tax loopholes, it’s not hard to imagine new laws coming into play regarding things like what data has to be reported, who’s responsible for verifying that data, penalties for inaccurate or absent information, and more. Those are far from the only possibilities, of course, and only time will tell what other measures Labour and other authorities may come up with.
Direct attacks on companies like Google and Facebook over their business practices, as has been seen with EU competition authorities, is a phenomenon that’s all but guaranteed to continue in the meantime. The big question is just how willing Google and others will be to cooperate with all of these new laws targeted squarely at them.