Google chairman Eric Schmidt has defended the company's tax policies, saying of the internet giant's moves to get out of paying billions of dollars: "It's called capitalism". "I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate." www.smh.com.au/business/world-bu ... 2batw.html Annoyingly, he does correctly point out that the governments offer incentives and they just use them. I think it's just the way he comes across with such impunity and even perhaps arrogrance. What people like this fail to realise, is that they can be well and truly done over by the public who don't realise what power we have. If people were serious, they could simply put it out there to everyone to simply not use Google again until they pay what they owe. It really is that simple. Get people to use other search engines and to change their default search engine away from Google. If it was pushed worldwide via the web and got any form of publicity, you watch their share price drop. "It's called capitalism"

Google chairman Eric Schmidt has defended the company's tax policies, saying of the internet giant's moves to get out of paying billions of dollars: "It's called capitalism". "I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate." www.smh.com.au/business/world-bu ... 2batw.html Annoyingly, he does correctly point out that the governments offer incentives and they just use them. I think it's just the way he comes across with such impunity and even perhaps arrogrance. What people like this fail to realise, is that they can be well and truly done over by the public who don't realise what power we have. If people were serious, they could simply put it out there to everyone to simply not use Google again until they pay what they owe. It really is that simple. Get people to use other search engines and to change their default search engine away from Google. If it was pushed worldwide via the web and got any form of publicity, you watch their share price drop. "It's called capitalism"

He's right though, I believe Google have a major office in Dublin and obviously its because the Irish set their rate of Corporation tax low so as to attract such businesses, if the Uk government want to attract business, attract lots of jobs which then hand over lots of income tax and NIS and a little lower Corporation tax which is actually higher than none because Google avoid paying it here, then they know what they have to do.

Avoiding using Starbucks is far, far easier than avoiding Google though - well actually, no its not, its just not as convenient, and at the end of it all, they aren't doing anything illegal at all.

He's identified the problem and the solution in one throwaway comment.

Indeed. But essentially it is pretty standard government practice: offer massive incentives - such as zero tax rates - to get large corporations to operate in the UK; in the event, then blame them for doing it if made public.

All the smoke and mirrors about them "complying with the law" is just that. There IS no specific law, for example, to say you can't transfer all your profits as "royalties" to your "sister company" in Holland or wherever. I get sick and tired of this "we're breaking no law" claptrap. You don't, and couldn't, make a separate law to cater for every possible combination of factors. The argument is a bit like being caught speeding, but saying there is no specific law that says I can't speed at 19:53 on this stretch of Acacia Avenue. Like the speeding law, there is indeed general law and powers to catch what may be termed "associated operations" etc., and the taxman has the power to look at the whole picture, and assess the company on what it is really doing, rather than on the basis of convoluted artificial schemes set up at huge cost to no purpose but to avoid tax.

The truth is that the taxman has NEVER gone after any of these big deals. They are content to ruthlessly pursue lesser mortals. They have no interest in the likes of Starbucks since they bloody well know that the whole arrangement is with government connivance agreement and encouragement anyway, and while they have to bluster for a bit when occasionally caught out, in the end, nothing will change.

And you will always get apologists for the Amagooglebucks of this world who bleat about "Yes, but they create jobs and gather tax and NI and if you make them pay tax they will go elsewhere etc etc". Really? They would? Well, then bye.

But that is not the issue. The issue is that this is all privately of great embarrassment to those in power and their clone predecessors, who publicly have to make certain noises but privately know it is all basically agreed on the QT on secret understandings and assurances, many of which end up with certain people in the future happening to land certain handsomely paid executive jobs or be otherwise handsomely rewarded. I'd bet even the mincing PR release from Starbucks ("We hear you; we now see we 'need to do more' when it comes to paying corporation tax"icon_wink.gif did not come out before they had agreed tactics to sing from the same hymn sheet. They all know though that the fuss will die down, and that nothing will materially change.

It's reasonably simple and transparent to avoid Starbucks and find a readily available alternative, less so with google, eBay & Amazon. People can see that they pay Starbucks because they actually hand cash over at the counter. Few pay google directly when they buy anything, similarly with Amazon & eBay, they make their revenues from advertising and from sellers' fees, so it's less transparent.

Starbucks offer of a £20m gift is laudable and laughable at the same time. If these companies choose not to participate in contributing to the benefits dervived from the provision of healthcare, education and indfrastructure, through taxation, then HMG should simply send them an annual bill with a guestimate. It's no different to what Starbucks have offered.

Too right, it's annoying that companies like Google get out of paying their fair whack of tax. I believe they should, indeed, pay what they technically owe.

BUT, if such incentives were not offered, Google (and others) simply wouldn't set up business there. They'd find somewhere else with a more 'attractive' tax system. You might think that's OK, but with companies like Google come lots and lots of jobs, and with those jobs come employees, all of whom pay tax on both their earnings and on what they spend their wages on. Without companies like Google investing in the local economy, those jobs simply wouldn't exist.

And then you've got the money Google spend on being able to do business and provide those jobs. Their offices have to be paid for, as do their internet connections, their phones, their office equipment, any office materials, and whatever else Google need to use in order to do business.

I'm not defending this, but Governments have to do their sums too, and if the lack of corporation tax is more than made up for with the tax they collect on related activities, then the argument that the country is being robbed stacks up a bit less than if you simplify it all as "Google don't pay tax"

I'm not saying it's right, all this, but if it's a case of "jobs v no jobs", or more accurately "jobs, investment and local spending v a fat nothing" then what's the alternative, really?

But other companies in the same market who [ido[/i pay corporation tax are then disadvantaged. This has long been a [url=http://www.guardian.co.uk/technology/2012/apr/06/tim-waterstone-attacks-amazon-tax-avoidancecomplaint of Tim Waterstone[/url (amongst others) who see their companies being undercut by those who don't pay tax. If you're going to go down the 'ah, but they create jobs' route, you surely also need to take into account the jobs lost elsewhere in those companies being undercut.

Google's European operations are based in Ireland. They pay Corporation Tax to the Irish Treasury, at the appropriate rate, on any profits that they make.

See also Ebay and Amazon in (IIRC) Luxembourg.

Where their end customer is has absolutely zero relevance to where the Corporation Tax is payable on their profits, in the same way that a UK business pays UK Corporation Tax on its profits even if all its customers are overseas.

There is a campaign of significant misinformation coming out of HMG at the moment as regards "tax avoidance". Still, it's much easier to find some corporate sap to blame than actually sitting down to address the widening tax gap and why the tax authorities are incapable of doing the job they are supposed to be there to do.

I don't doubt this, and I do agree to a point.

But small companies are also disadvantaged in most areas. Comparative lack of cash availability and buying power (thus being unable to get as large a trade discount as a bigger buyer, for instance) being two examples.

The point I'm making is that there are many other things to take into account as well as corporation tax. For instance, no-one is saying that sliding scale trade discounts have to end, are they?

Of course they would still operate here. The UK is Google's 2nd biggest market, and accounts for 11% of their global business revenue. Starbucks generate over £3bn in revenue in the UK. The UK is too valuable to them simply to avoid being here. They would still be here, even if they had to pay 25% corporation tax.

Why would they operate a base here just because people in the UK use Google? That doesn't make any sense whatsoever given they're an internet search engine, who could operate from Mars, if they had electric.

All their servers and stuff are in the middle of Norway or somewhere anyway. The person who uses the search engine is the product that Google sells, not their customer. Google's customers are the millions of businesses that advertise on their platforms. To market to and attract those customers they need to have a presence in the UK, and just like any other B2B business that operates in the UK they need a UK operation. Those customers want a UK based sales person to buy from etc....

Starbucks would have trouble selling coffee over the internet too.

I wonder how many who moan about Google and Starbucks have downloaded the new Google Maps app for their shine (but crippled) iPhone...

Rubbish. The people Google employ here in the UK are employed to make a profit for Google in the UK. If the UK government somehow managed to take 24% of that profit (current main rate of corporation tax) the idea Google would cease doing business here and chuck away the other 76% of that UK derived profit is a ludicrous idea. They would continue to employ those people just the same and would continue to do business here.



Profit comes after overheads have been deducted doesn't it!



Given the tax they collect on related activities would be no different then you would be wrong there.



Wrong again. It's worth repeating. If Google, eBay or anyone else suddenly found the legal mechanisms they currently use to avoid tax were no longer available they would not cease doing business here.

If they did the market would look after itself and the void would be filled.

Don't forget Google make profits FROM the UK. That is from you and me and their UK customers. They can't do that if they cease trading here.

So any mechanism that can be dreamt up to get them to pay corporation tax is a safe and sure way to raise more revenue with no downside.

Biggest load of crap I've ever heard, DaveO. Stick to left wing political rants, and leave business to those who know what they talk about.

Google, like ALL corporations, are LEGALLY OBLIGATED to pursue profit. If Google responded to increased taxation in the UK by punitively withdrawing highly-profitable services its shareholders, who would stand to lose financially, are legally entitled to seek not just the removal of the chairman and/or board of directors but also their prosecution under United States federal law.

Well in the scheme of things it means nothing, but i changed my default search engine from google.

Leave business to those who know what they talk about? You aren't suggesting you do are you?

What you post in this thread shows the exact opposite. It's full of baseless "facts" such as:

"You might think that's OK, but with companies like Google come lots and lots of jobs, and with those jobs come employees, all of whom pay tax on both their earnings and on what they spend their wages on. Without companies like Google investing in the local economy, those jobs simply wouldn't exist."

"Lots and lots of jobs"? They employ a grand total of 1300 staff in the UK. They are not a major employer by any stretch of the imagination - apart from in yours that is.

If they shut their UK operation down because they had to pay corporation tax the loss of income tax and NI from those employees would be more than made up for by the corporation tax take so that right wing b/s reasoning doesn't apply here does it?

Not that they would shut down the UK operation anyway. The only reason they employ people here is to help them make a profit out of their second largest market.

And dismissing the tax disadvantages suffered by small companies because they have other disadvantages is just completely irrelevant.

So before you start telling people they write a load of crap you ought to think before you type. Otherwise you just look foolish.

Exactly. The idea they would give up their UK revenue if they had to start paying tax on it is as I said ludicrous.

The way Google avoid tax in the UK that they would otherwise be liable for (no their tax liability is not solely in Ireland as someone else suggested) is by doing things like posting a loss due to giving out share awards to employees.

The fact they can register a loss in that way and so avoid a higher tax bill is (part of) the problem. There just seem far too many ways for multi-national businesses to reduce their paper profit to zero or less simply to avoid tax. However if those mechanisms were to be denied them, they would still be here doing what they do and taking home a mere 76% of their profit.

Well, this is the problem. Far too many people are either unaware or don't want to recognise the fact - written in plain English into the legal obligations of US-based corporations - that they MUST pursue profit. We have to view this issue in terms of [ustructures[/u. Structures which shackle corporate bosses (who often have the best of intentions) exclusively to one mode of behavior - the pursuit of maximum profit above all other concerns. These are the very same structures which lead to, say, oil spills or tragedies such as Bhopal.

So you have, the head of global oil company X, who might otherwise be completely opposed to harming the environment, presented with two solutions to, say, a well head problem:

Option 1 (Cheap): Fast and loose and ignores the safety concerns of workers.
Option 2 (Expensive): Thorough and safe.

Irrespective of his concerns (if indeed he has any), he is [ulegally obligated[/u to choose option 1. If he doesn't he knows that the shareholders of the company, who stand to be out of pocket, can seek his removal. And he also knows there are any number of people after his job who will have no issues whatsoever with taking the cheaper route.

It's completely mad to think Google would dump what for it is a very profitable venture simply out of spite. That option is not just inconceivable but [iillegal. [/i

But beyond this, we really must think seriously about how we have allowed ourselves to be controlled by a legally-binding ideology that, taken to its logical conclusion, can only lead to dire consequences. This is why Marxists - quite correctly - argue that if capitalism isn't protected from itself it must ultimately consume itself.

The exec would not be obliged to choose option 1. With the US being such a litigious society he would have to balance the decision to choose the cheap option against the potential costs that would be incurred should an incident occur due to not opting for the safe and thorough option resulting in large damages and fines being awarded against the company. The exec would then have to justify his decision to the shareholders.

The exec is in a position to make such a choice. And he may well be able to justify it to his shareholders without them calling for his neck - especially if the difference in costs isn't too big. But he also knows they may not be sympathetic in any way.

Has society crashed to such depths that it is now utterly reliant upon the legal system and its sophist priesthood to arbitrate good?

We're talking RIGHT and WRONG here. If I scheme against you at work and get you the sack, or sleep with your wife or girlfriend and give her the clap, or on your toilet seat, or cough over you whilst thick with flu, or yap on my phone two seats behind you at the cinema, or steal your car parking spot etc. etc. - do you just cheerfully carry on because, after all, I've not broken any laws?

Can you provide some authority for this legal obligation to maximise profits?

I want to read up on this.

Google "Dodge v. Ford Motor Company" or "eBay v. Newmark".

[i"A business corporation is organized and carried on primarily for the profit of the stockholders. The powers of the directors are to be employed for that end. The discretion of directors is to be exercised in the choice of means to attain that end, and does not extend to a change in the end itself, to the reduction of profits, or to the nondistribution of profits among stockholders in order to devote them to other purposes."[/i