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Google’s UK tax avoidance

What is going on at Google is always headline news in the internet marketing world, but it’s affairs went more mainstream recently, hitting the headlines with it’s tax avoidance issues.

Google is by far the most used search engine in the UK. It made a minor ripple at the beginning of November when it was announced that it had dropped to it’s lowest percentage share of searches for five years in the UK, dipping below 90%. However, the figures show that 89.33% of UK searches are done through Google, still meaning that if you want your website to be found online, Google is still the only search engine that is really worth considering. These figures help to make the UK Google’s second biggest market.

Despite this, Google only paid £6 million in corporate tax last year, a rate of 3.2% on its overseas earnings. By funnelling over £6 billion of revenues from international subsidiaries into Bermuda last year, Google avoided paying $2 billion tax, thus halving its tax bill. This led to an uproar from MPs in the UK last week, calling Google, Starbucks and Amazon, the most prominent companies who had avoided tax, immoral. Starbucks, in an attempt to avoid the bad publicity last week, announced that they would voluntarily pay £20 million more in taxes to the UK exchequer over the next 2 years.

Google has effectively said it is not their fault that this is allowed to happen. Today, Google’s chairman, Eric Schmidt, told Bloomberg: “We pay lots of taxes; we pay them in the legally prescribed ways. 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. It’s called capitalism. We are proudly capitalistic. I’m not confused about this.”

Agree? Disagree? Do let James Hopkins know what you think by commenting below.

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