Thanks for contacting me and for relaying your concerns regarding the amount of tax Google pays in this country.
I am sure you understand that Corporation Tax is paid on profits and not revenue, international law dictates that tax is collected where the economic activity that generates those profits takes place. For example, if a British pharmaceutical company sells medicine to Latin America, it is mostly taxed where those products are created – here in the UK – rather than where the products are consumed.
This applies to Google, who pay the bulk of their corporation tax in the US (about $3.3bn in the last reported year).
After a six-year audit Google are now paying an extra £130m in back tax on the economic activity they generated here. This back-tax is the money owed on economic activity generated in the UK.
However, Google’s contribution to the economy should not solely be measured in terms of the amount of tax paid. Whilst I acknowledge this is important, it also employs 3,000 people, creates numerous well paid jobs and has invested heavily in the UK, which is obviously good for the long-term economic future of the country.
Since the period covered by Google’s settlement with HMRC, this Government has led the world by introducing a diverted profits tax to stop multinationals using contrived arrangements to shift profits outside of the UK. I am pleased the Government has also made more than 40 changes to tax law to close loopholes that, quite simply, were happily allowed by old Labour governments and we have introduced a new general anti-abuse rule to deter abusive tax avoidance.
The Government is committed to tackling aggressive tax avoidance and evasion at all levels to ensure everyone pays the right tax at the right time. Avoidance (and evasion) damages the effectiveness of the tax system and imposes additional costs on all taxpayers. Thanks to the changes this Government has made big multinational corporations know they cannot carry on as they have done in the past, and must expect to pay more tax...
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