SGC Business

Google may be avoiding big tax bills but is the damage to its reputation worth it?

As part of the new world order, or ‘new reality’, both US President Barack Obama and UK Prime Minister Gordon Brown have made it clear that they intend to put pressure on tax havens such as Switzerland, Monaco and Liechtenstein etc.

Broadly speaking, this seems fair, especially where it involves private individuals trying to evade legitimate taxation in their home country. But all this noise about tax havens has given the media a new bête noire . In the case of the UK press, papers such as the Guardian and Times have campaigns to expose companies that seek to avoid paying local taxes. Most recently that attention has fallen upon Google.

According to UK media reports, the company earned stg£1.25 billion for which the tax bill would have been roughly stg£100 million. Instead Google paid just stg£600 thousand by channeling its UK revenues through Ireland. Of course, in the final analysis it can be argued that Google is simply looking out for shareholder value by seeking every legitimate way to minimise its total global tax burden and save money.

Meantime, Google will still need to deal with the practical realities of being exposed for such practices. Whether legal or not, appearances and reputations matter. Even if Google’s tax avoidance is above board, the mere fact that it made so much revenue in the UK yet paid so little in tax, sullies a hard-won reputation.

Expect more pressure to be put on Ireland’s low corporation tax rate of 12.5% to be changed and more talk of tax harmonisation across the EU from Germany and France.

Do you think what Google is doing is wrong?

Source: The above is an article from enn.ie