Google has insisted it pays a “fair” amount of tax in the UK, as one high-paid executive came under fire from MPs after admitting he did not know how much he earned.
Top executives from the internet giant were grilled by the House of Commons Public Accounts Committee yesterday over a £130 million settlement with HM Revenue & Customs to cover taxes due over the past ten years.
The deal was hailed at the time by Chancellor George Osborne as a “victory”, but committee chair Meg Hillier said taxpayers felt “anger and frustration” over the figure, when Google earned profits of £106 million on revenues of £1.8 billion in the UK in the past 18 months alone.
Google’s president for Europe, the Middle East and Africa, Matt Brittin, said he understood public anger over claims the deal entailed a 3 per cent tax rate, but he insisted it paid corporation tax at 20 per cent on its “UK activities” like other companies.
Ms Hillier told Mr Brittin he was “living on another planet”. She demanded four times to be told what he was personally paid, but he responded: “I don’t have the figure but I will happily provide it.”
The committee chair responded: “You don’t know what you get paid? ... Out there, taxpayers, our constituents, are very angry, they live in a different world clearly to the world you live in, if you can’t even tell us what you are paid.”
Mr Brittin replied: “I understand the anger and that people when they see reported that we are paying 3% tax would be angry. But we’re not. We’re paying 20% tax.”
The £130 million figure was “the conclusion of a six-year rigorous, independent tax audit” in which Google offered “full transparency” to the British tax authorities, he claimed.
He said much of the economic value driving sales in the UK was created by 20,000 engineers writing code in the US.
Google’s 4,000 staff in the UK were outnumbered by the 5,000-plus “in Ireland” who processed business for the whole of Europe, the Middle East and Africa, he claimed. And he insisted Google’s practice of channelling funds through Bermuda “has no impact on the tax we pay in the UK”.
But committee member Stewart Jackson told him: “You have made a choice to avoid tax and you have set up structures so to do. ”
And David Mowat said: “Our concerns are not that you should be taxed on sales, but that you have come up with a number of contrived mechanisms, such as the ‘Double Irish’, the ‘Dutch Sandwich’ and the use of Bermuda.”
Google Inc’s vice-president Tom Hutchinson said the £130m paid to HMRC included £18m interest, but did not include any fines or payments under Osborne’s diverted profits tax – nicknamed the Google Tax.