A senior government minister has admitted the tax settlement between Google and the UK government “was not a glorious moment”.
The admission by the business secretary, Sajid Javid, came as a senior executive from Google claimed he could not say how much UK profit has been generated by the technology firm in the past decade, or how many meetings had been held between the company’s executives and ministers.
It follows the announcement nine days ago that the government came to an agreement with Google in which £130m will be paid in back taxes covering the past decade.
There has been growing criticism of the firm and the government over the deal, which was negotiated between HMRC officials and Google.
George Osborne, the chancellor, initially labelled the agreement a “major success”, but Javid told the BBC’s Andrew Marr Show that he shared the feeling of many people that there was a sense of “injustice” with the deal.
“It wasn’t a glorious moment, when people look at these issues, but it is important, I think, to talk about also what the government is doing,” he said.
Javid was asked if he agreed it was unfair that a large corporation like Google could speak directly to the government and HMRC about its tax affairs while small- and medium-sized businesses don’t have that option available to them.
“I speak with thousands of companies, small- and medium-sized as well as of course large companies, and there is a sense of injustice with what they see,” he said.
“They do look at this and they say, ‘Look, I don’t operate all these multiple jurisdictions around the world, I can’t shift profits around, what about me, where’s the level playing field?’ and I share that sense and the sort of sense of unfairness that exists.”
Peter Barron, head of communications at Google across Europe, told the Andrew Marr Show he could not answer questions about Google’s profits over the past decade despite reports that it had made £7.2bn and therefore is paying less than 3% in corporation tax on its UK profits.
He said the firm pays corporation tax of 20% and claimed there had been no “sweetheart deal”.
“We have a settlement with HMRC, the government sets the law, HMRC enforces it and we follow it. The £130m was an additional tax. For the last 18 months we paid £42.6m. It [the UK] is our second biggest global market but identifying the added value in the UK is a difficult business,” Barron said.
Asked why Google paid its taxes in Ireland, which has significantly lower corporation tax, he said that most advertising deals were closed in Ireland.
“Corporation tax is not on sales or revenues, it is on profit. Identifying what the profit has been over the last 10 years is quite a business,” he said.
Google is expected to announce on Monday that it has amassed £30bn of profits from non-US sales in Bermuda, where companies are not liable to pay corporation tax. The UK is Google’s largest non-US market, accounting for 11% of its global revenues, according to documents filed in America.
The Observer revealed that the UK government has been privately lobbying the EU to remove Bermuda from an official blacklist.
Barron said the arrangement in Bermuda had no impact on the amount of tax it pays in the UK. “It’s very, very important to make it clear that the Bermuda arrangement has absolutely no bearing on the amount of tax that we pay in the UK. No bearing whatsoever,” he said.
When asked how much of the £30bn may have come from the UK, he said: “I don’t know the answer, I haven’t got the answer [at] my fingertips, except I would say that about 10% of global revenues come from the UK.”
This article was written by Rajeev Syal, for theguardian.com on Sunday 31st January 2016 11.57 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010