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First it was the UK government, and now it is France that is unhappy with Google’s alleged tax avoidance.
France’s finance ministry reportedly wants Google to pay the government the equivalent of nearly $1.8 billion in back taxes on revenues earned in that country over the past several years, according to Reuters, quoting an unnamed source close to the matter.
The reported move comes just weeks after France’s Finance Minister Michel Sapin ruled out any negotiations with Google on back taxes owed in France.
In a conference in Paris earlier this month, Sapin had promised that Google would pay a “way bigger” tax than the 130 million euro ($143 million) settlement the company had arrived at with the UK government in January.
Google did not respond immediately to a request for comment on the reported plans by the French government to collect back taxes from the firm.
For Google, the tax issues in the UK and France add to the company’s already formidable legal problems in the European Union. The European Commission is currently investigating Google’s business practices in response to complaints from numerous quarters about Google using its massive market presence to force rivals out of business. The company is also in trouble with data protection authorities in several EU member nations over its privacy practices, most notably those pertaining to its implementation of the EU’s right to be forgotten mandate.
News of the French government’s plans to hit Google with a $1.8 billion tax bill comes just two days after the UK government’s Committee of Public Accounts released a report raising questions about the fairness of Google’s tax settlement deal with the government there.
The settlement came after a six-year investigation and audit of the company’s accounts by tax authorities in the UK. The amount covers taxes allegedly owed by Google over a 10-year period starting in 2005.
Several lawmakers have slammed the settlement as being too lenient on Google and said the company owes far more in back taxes based on the revenues it generates in the UK. The controversy over the tax deal has caught the attention of the European Commission, which has hinted it might conduct its own investigation of Google’s tax practices in the EU.
In its report this week, the UK’s Public Accounts committee said a lack of transparency regarding tax settlements such as the one between Google and the government made it impossible to determine whether the company paid the right amount of tax or not.
The legal rights of taxpayers in the UK mean the government cannot explain how it arrived at the settlement amount with Google or other similar tax settlements, the committee said. “In most cases corporation tax settlements only come to light because companies make a public statement or are required to disclose information about them in their financial statements.”
But even as it said that, the committee also described the amount that Google had paid as being small in proportion to the scale of the company’s activities in the UK. “We are concerned that [the government] appears to have settled for less corporation tax from Google than other countries are willing to accept,” the reported noted, pointing to concerns raised by the French and Italian tax authorities in the matter. “Although we cannot verify those claims, it does appear that other tax authorities have been more challenging in their assessment of Google’s tax position.”
Google is not the only company being subjected to such scrutiny in the EU, though it probably is the most controversial. Google is no different from many other large multinationals that use a variety of accounting mechanisms to minimize their tax liability.