LONDON - A key British lawmaker accused search giant Google of dodging its taxes on Thursday, issuing a scathing report that accuses the U.S. 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 take 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 needs 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 comes at a tough economic moment for Britain, which is struggling with austerity measures that have led to cuts in welfare programs, 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 $1.3 billion in revenue from the UK, according to a Google release. The company argues that the overwhelming majority of sales actually occur at the company's European head office in Dublin.
The location is important. Brittin told lawmakers in November that sales didn't take place in Britain but in Ireland, where the corporate tax rate is a bargain basement 12.5 per cent. Employees at Google's London office merely promote the company's products, he said, but the sales take 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 are in Ireland.
Hodge rejected the characterization.
"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."