The conservative party plan to “crack down” on multinational technology companies who are avoiding UK tax, Chancellor George Osborne announced yesterday.
George Osborne didn’t mention Google by name, yet other people have already started referring to it as the “Google Tax.” While Google made $5.6 billion (£3.4 billion) of revenue in the UK last year, it paid corporation tax of £20.4 million.
George Osborne said:
“While we offer some of the lowest business taxes in the world, we expect those taxes to be paid – not avoided.
“Some technology companies go to extraordinary lengths to pay little or no tax here. If you abuse our tax system, you abuse the trust of the British people.”
Tax is avoided through what is known as “double Irish” structures. Google makes a lot of money in the UK but collects nearly all of its profits in Ireland. It doesn’t pay much tax there either though, with most of the money shifted between holdings and a Dublin-registered company located in Bermuda for tax purposes.
Apple, Microsoft and Facebook are among other US tech companies that use similar “double Irish” structures.
George Osborne said they will put a stop to the tax avoidance and plans to outline his exact plan during the Autumn statement.
Google was unavailable for comment to the Guardian on Monday.