The Google Tax
Discussion
Will it work?
Companies that move their profits overseas to avoid tax will be subject to a "diverted profits tax" from April, the chancellor has said.
In his final Budget before the election, George Osborne said firms that aid tax evasion will also face new penalties and criminal prosecutions.
The so-called "Google Tax" is designed to discourage large companies diverting profits out of the the UK to avoid tax.
It follows rows over how much corporation tax some companies pay.
http://www.bbc.co.uk/news/business-31942639
Companies that move their profits overseas to avoid tax will be subject to a "diverted profits tax" from April, the chancellor has said.
In his final Budget before the election, George Osborne said firms that aid tax evasion will also face new penalties and criminal prosecutions.
The so-called "Google Tax" is designed to discourage large companies diverting profits out of the the UK to avoid tax.
It follows rows over how much corporation tax some companies pay.
http://www.bbc.co.uk/news/business-31942639
Inkyfingers said:
I'm sure it could be made to work, but lets not kid ourselves that this is anything other than a political gesture.
I think that's a bit cynical to draw that conclusion just yet. Google, when challenged on the tax that they pay, generally reply to say that they pay the tax they owe accordingly to the law, and that it is up to government to change the law if they want to.
Whilst I'm aware there are a number of ways a company such as google might try to avoid this particular type of tax, I think it is much more difficult to make the argument above and then utilise these type of avoidance techniques at the same time.
I think it is more likely that the companies this affects will decide to cooperate in a way that most of the public would expect them to.
Time will tell - it will be interesting to see how much revenue this particular tax raises.
EddieSteadyGo said:
Inkyfingers said:
I'm sure it could be made to work, but lets not kid ourselves that this is anything other than a political gesture.
I think that's a bit cynical to draw that conclusion just yet. Google, when challenged on the tax that they pay, generally reply to say that they pay the tax they owe accordingly to the law, and that it is up to government to change the law if they want to.
Whilst I'm aware there are a number of ways a company such as google might try to avoid this particular type of tax, I think it is much more difficult to make the argument above and then utilise these type of avoidance techniques at the same time.
I think it is more likely that the companies this affects will decide to cooperate in a way that most of the public would expect them to.
Time will tell - it will be interesting to see how much revenue this particular tax raises.
98elise said:
Google could simply move the jobs offshore and not have a presence in this country.
I think you will find that isn't the focus of the tax proposal.The objective is to tax profits made in the UK. Google and many others make large profits from UK consumers and UK businesses. The idea is to tax a portion of these profits. It isn't related to the number of people employed.
It will never provide anything other than a token return by international enterprises which will take the heat off the politicians until the media bring it back to the forefront.
They don't simply shift money overseas, they buy services etc. from trade partner (read parent company) and pay for these services. Whether this is through licensing or something else, they pay for this service.
Any change in law is simply chasing shadows and the tax / legal advisory services of the enterprise businesses are so far ahead of the game they almost make a mockery of any government capabilities
They don't simply shift money overseas, they buy services etc. from trade partner (read parent company) and pay for these services. Whether this is through licensing or something else, they pay for this service.
Any change in law is simply chasing shadows and the tax / legal advisory services of the enterprise businesses are so far ahead of the game they almost make a mockery of any government capabilities
EddieSteadyGo said:
98elise said:
Google could simply move the jobs offshore and not have a presence in this country.
I think you will find that isn't the focus of the tax proposal.The objective is to tax profits made in the UK. Google and many others make large profits from UK consumers and UK businesses. The idea is to tax a portion of these profits. It isn't related to the number of people employed.
Can the UK government charge a foreign company corporation tax when it has no presence in the country? and can the same happen in reverse?
39sl said:
They don't simply shift money overseas, they buy services etc. from trade partner (read parent company) and pay for these services. Whether this is through licensing or something else, they pay for this service.
This is definitely true, and to be fair, in many cases it is also reasonable for the parent company to charge a subsidiary for use of things like its technology, infrastructure etc.There is no doubt that the complications of establishing how much tax a company would owe is one main reason why it hasn't been implemented before.
Nevertheless, will be interesting to see the detail, and I hope the government have thought it through to avoid the obvious pitfalls.
These multinationals have been taking the piss though, haven't they?
I'd say that If they want pay fees to a subsidiary they can do so, to one registered and paying tax in the UK. It's not as if the corporation rates are punitive over here, they are less than the man in the street is paying and if you want to do business with UK PLC you've a corporate responsibility to contribute fairly.
Why not make aggressive tax planning accountants and lawyers fees fighting HMRC to not be allowable against corporation tax unless a 5 yearly average of taxes being paid is above some reasonable limit. If they can't contribute fairly should they be allowed to be in competition with businesses who do contribute fairly?
I'd say that If they want pay fees to a subsidiary they can do so, to one registered and paying tax in the UK. It's not as if the corporation rates are punitive over here, they are less than the man in the street is paying and if you want to do business with UK PLC you've a corporate responsibility to contribute fairly.
Why not make aggressive tax planning accountants and lawyers fees fighting HMRC to not be allowable against corporation tax unless a 5 yearly average of taxes being paid is above some reasonable limit. If they can't contribute fairly should they be allowed to be in competition with businesses who do contribute fairly?
thepeoplespal said:
These multinationals have been taking the piss though, haven't they?
I'd say that If they want pay fees to a subsidiary they can do so, to one registered and paying tax in the UK. It's not as if the corporation rates are punitive over here, they are less than the man in the street is paying and if you want to do business with UK PLC you've a corporate responsibility to contribute fairly.
Why not make aggressive tax planning accountants and lawyers fees fighting HMRC to not be allowable against corporation tax unless a 5 yearly average of taxes being paid is above some reasonable limit. If they can't contribute fairly should they be allowed to be in competition with businesses who do contribute fairly?
But that's the point of a multinational. Why should a client only country, i.e. one that only consumes services reap the rewards of intellectual property or services developed in an entirely different country?I'd say that If they want pay fees to a subsidiary they can do so, to one registered and paying tax in the UK. It's not as if the corporation rates are punitive over here, they are less than the man in the street is paying and if you want to do business with UK PLC you've a corporate responsibility to contribute fairly.
Why not make aggressive tax planning accountants and lawyers fees fighting HMRC to not be allowable against corporation tax unless a 5 yearly average of taxes being paid is above some reasonable limit. If they can't contribute fairly should they be allowed to be in competition with businesses who do contribute fairly?
Push this too far, and you just killed the franchise concept.
Which is why it has to be reasonable. But Why should a multinational get more favourable deal than other local businesses. Franchise businesses need the infrastructure and human capital ion the host country in order to generate profits to repatriate to their country of choice, just as they need a reasonable return on their intellectual property, so does the country they are taking it from.
Everyone needs to benefit, if one part of the chain gets screwed things become unviable, so it's important for everyone to get a reasonable cut.
Everyone needs to benefit, if one part of the chain gets screwed things become unviable, so it's important for everyone to get a reasonable cut.
Edited by thepeoplespal on Friday 20th March 14:55
Sorry I have to agree, this is pissing in the wind. It will look good on paper but achieve little for reasons already stated.
1) The tax advisor's for large businesses are a lot smarter than the government.
2) Companies are structured in such a way, parent trading companies, subsidiaries "paying" parent companies for services etc that there is no law you can write which could catch them. If you did, it would effect and p
s off many other wealthy people\businesses who also conduct business in this way.
3) If the Government push this too far, the companies will just pack up and go somewhere else leading to UK job losses which the Government can ill afford. Companies have threatened this in the past and the Government have backed down.
4) A lot of these large companies have a a huge amount of sway in the political arena so good luck getting an EFFECTIVE law which could actually tackle this through parliament. Also where do you think all those retired politicians go to work once they've done their stint in the public sector. I don't think rocking the boat and upsetting the "old boys network" would in their best interests.
This is nothing more than a bit of PR before the general election, nothing to see here.
1) The tax advisor's for large businesses are a lot smarter than the government.
2) Companies are structured in such a way, parent trading companies, subsidiaries "paying" parent companies for services etc that there is no law you can write which could catch them. If you did, it would effect and p
s off many other wealthy people\businesses who also conduct business in this way.3) If the Government push this too far, the companies will just pack up and go somewhere else leading to UK job losses which the Government can ill afford. Companies have threatened this in the past and the Government have backed down.
4) A lot of these large companies have a a huge amount of sway in the political arena so good luck getting an EFFECTIVE law which could actually tackle this through parliament. Also where do you think all those retired politicians go to work once they've done their stint in the public sector. I don't think rocking the boat and upsetting the "old boys network" would in their best interests.
This is nothing more than a bit of PR before the general election, nothing to see here.
Google, and others, rely on rulings that their taxable entities have no 'permanent establishment' in higher tax jurisdictions.
This is not a photo of a permanent establishment
You might be one of those naive people that thinks an office from which 2,800 people will be working by the end of the year simply has to be a permanent establishment, but you would be wrong.
This is not a photo of a permanent establishment
You might be one of those naive people that thinks an office from which 2,800 people will be working by the end of the year simply has to be a permanent establishment, but you would be wrong.
JPJPJP said:
Google, and others, rely on rulings that their taxable entities have no 'permanent establishment' in higher tax jurisdictions.
This is not a photo of a permanent establishment
You might be one of those naive people that thinks an office from which 2,800 people will be working by the end of the year simply has to be a permanent establishment, but you would be wrong.
It is a permanent establishment of some enterprise, just perhaps not Google Inc. (or indeed Alphabet Inc.)This is not a photo of a permanent establishment
You might be one of those naive people that thinks an office from which 2,800 people will be working by the end of the year simply has to be a permanent establishment, but you would be wrong.
Companies House suggests it's either GOOGLE COMMERCE LIMITED UK ESTABLISHMENT or GOOGLE UK LIMITED. They also have GOOGLE PAYMENT LIMITED and GOOGLE CLOUD UK LIMITED, albeit these are registered at Taylor Wessing's New Street Square address.
Gassing Station | Finance | Top of Page | What's New | My Stuff