Was £130 million enough to catch up on a tax bill for the last 10 years? Sales of £4.6 billion in 2014 and profits of £106 million in 18 months?
It just doesn’t seem like a reasonable amount, and it’s becoming a political football. This, despite the fact that Google paid way, way more tax than companies like Facebook. They only coughed up £4000 in tax last year.
Google in the US actually uses Google UK for UK-based sales, and it’s under that company that tax calculations are performed. A deal was reached with the UK tax man a few days ago.
Either way, critics suggest that the tax payment was merely a token gesture. A PR measure to make the company look good. Meanwhile, the 31 OECD (Organisation for Economic Co-operation and Development) members are to implement rules to stop companies using complicated tax arrangements to dodge tax. It will now mean that tax must be paid in the country where the profits are made.
It’ll be interesting to see what happens next. Companies like Facebook and Google, like many others, are keen to reduce costs. “Legally moving cash around to reduce taxation” is something that is logical and obvious to the accountants at firms like this. That’s despite the fact that, morally, it’s a bit of a grey area. Those of us heading to work can’t avoid tax, and the fact that the “fat cats” at these large multinationals can do so is a bitter pill to swallow. However, with many countries now working together to clamp down on this cash slight-of-hand, the other outcome could be higher prices for the customers of these companies. Do we want that?
Now sure, you can argue that these companies are sickeningly rich and can easily pay all this tax, but these companies have grown used to their profit margins. As have their shareholders. So to shore that up it could mean more “premium” or “paid for” features. More subscription models perhaps.
Will the rich continue to get richer, while we all continue to feed them?