Gauke Rejects Claim U.K. Gave Google Special Tax Treatmentby
Minister tells Parliament HMRC doesn't do `sweetheart deals'
Labour opposition says size of Google tax payment 'derisory'
Treasury Secretary David Gauke denied the U.K. government is giving Google Inc. and other multinational companies special treatment over tax, saying Her Majesty’s Revenue and Customs does not cut “sweetheart deals” with anyone.
The dispute was sparked by the announcement late last week that Google parent Alphabet Inc. had agreed to pay 130 million pounds ($185 million) in a tax settlement with U.K. authorities, an amount the opposition Labour Party called “derisory.”
“There is no lower special rate for Google or any other taxpayer in this country,” Gauke told Parliament Monday during an unscheduled debate called by Labour’s finance spokesman, John McDonnell. Google’s payment is “solid evidence that companies are changing their models and reviewing their structures” as a result of government action, he said.
Google will adopt a new approach for U.K. taxes, and the settlement covers taxes going back to 2005, the company said Friday in an e-mailed statement. Alphabet has been accused of paying a fraction of taxes due on its sales in the U.K. For example, the tech giant paid $16 million in U.K. corporation tax from 2006 to 2011 on $18 billion of revenue,according to a panel in 2013. It has also faced sharp rebukes from critics and regulators in Europe for using innovative tools to keep its tax rates lower in some regions.
“We have taken the lead domestically and internationally when it comes to getting companies to pay their fair share of tax,” Gauke said. “We are incentivising businesses to do the right thing and come to the table early.”
As a result of the disclosures, Parliament’s Public Accounts Committee summoned Google and the tax authority to explain their practices and the settlement to lawmakers, while the Treasury Select Committee on Monday announced it had agreed the terms of reference for its inquiry into U.K. tax policy.
“Google may be the symptom, but it is not the cause," TSC Chairman Andrew Tyrie said in an e-mailed statement. “There is a lot the government could be doing. Tax policy must be made more practicable and the tax system more coherent. Tax needs to be fair.”