A key British MP accused search giant Google of dodging its taxes today, issuing a scathing report that accuses the US internet company of taking on highly contrived arrangements serving no purpose other than to avoid paying its fair share.
The report came after testimony by Google vice president Matt Brittin, who tried to persuade members of Britain’s parliamentary Public Accounts Committee that his company was transparent and fair.
Committee chair Margaret Hodge rejected arguments that Google’s advertising sales took place in Ireland and not the UK.
‘‘Google brazenly argued before this committee that its tax arrangements in the UK are defensible and lawful,’’ she wrote, adding that the ‘‘argument is deeply unconvincing and has been undermined by information from whistleblowers, including ex-employees of Google, who told us that UK-based staff are engaged in selling.’’
Hodge said the government needed to act to shut down loopholes.
‘‘The company’s highly contrived tax arrangement has no purpose other than to enable the company to avoid UK corporation tax,’’ she said.
Brittin had testified that the company’s employees ‘‘fully comply with the law’’.
The tax issue came at a tough economic moment for Britain, which was struggling with austerity measures that have led to cuts in welfare programmes, jobs and government spending.
Like several other multinational corporations — including Amazon, Facebook and Starbucks — Google’s complex corporate structures and disproportionately low tax bills have drawn the ire of a public facing one of the worst economic crises since the Great Depression.
Google has paid less than 0.1 per cent of its billions in UK revenue back to the government in tax.
In the first quarter of this year, it made US$1.3 billion in revenue from the UK, according to a Google release.
The company argued that the overwhelming majority of sales actually occured at the company’s European head office in Dublin.
The location was important. Brittin told lawmakers in November that sales didn’t take place in Britain, but in Ireland, where the corporate tax rate was a bargain basement 12.5 per cent.
Employees at Google’s London office merely promoted the company’s products, he said, but the sales took place in Ireland.
An investigation by the Reuters news agency cast doubt on those claims and the committee asked to speak to Brittin for a second time.
Brittin acknowledged that Google employed ‘‘people with sales skills,’’ but insisted that those doing the sales were in Ireland.
Hodge rejected the characterisation.
‘‘Google’s reputation has been damaged by these revelations of aggressive tax avoidance,’’ she said.
‘‘That damage will not be repaired until the company arranges to pay its fair share of tax in the country where it earns the profits from the business it conducts.’’