eWEEK content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.
Google has agreed to face UK lawmakers to answer questions about a recent tax settlement with the government there over which a growing number of people in the European Union have expressed outrage.
Meanwhile, in a related development, the Guardian newspaper Thursday quoted a senior tax policy official in Europe as saying the European Commission is prepared to investigate the Google and UK deal as well if necessary.
Former French Finance Minister Pierre Moscovici made the comments during the launch of a broader EU-wide initiative aimed at addressing large-scale corporate tax avoidance schemes and “sweetheart deals” between EU governments and corporations, the Guardian reported. EU antitrust chief Margrethe Vestager has also hinted at an investigation of the settlement between the UK and Google, the paper said.
Matt Brittin, head of Google Europe, is scheduled to testify before members of the UK Parliament’s Public Accounts Committee on Feb. 11.
The hearing stems from a recent agreement by Google to pay about £130 million in back taxes over a 10-year period starting 2005.
Of that amount, a total of £46.2 million will cover taxes on earnings of £106 million for the period between January 2014 and June 2015, the Guardian had noted in an earlier report.
The settlement follows a six-year investigation and an audit of Google’s accounts by UK tax authorities. The company is one of several multinational firms being investigated for allegedly avoiding tax payments despite making billions in revenues over the past several years.
Critics have blasted the settlement, calling it a sweetheart deal between Google and the UK government. Many have said that the amount Google has agreed to pay represents a tax rate that is not available to other companies.
John McDonnell, British Labor Party MP and Shadow Chancellor of the Exchequer, claimed that the settlement means Google’s effective tax rate is around 3 percent though it had UK revenues of £1 billion in 2015 alone.
In a letter to George Osborne, chancellor of the Exchequer, McDonnell expressed concern over the tax treatment received by large companies such as Google. “When times are tough it is more important than ever that everyone pays—and is seen to pay—their fair share,” he noted in the letter.
In addition to Google’s Brittin, other witnesses at the Public Accounts Committee hearing scheduled for Feb. 11 include Dame Lin Homer, chief executive and permanent secretary of the UK’s Revenue and Customs department, and Jim Harra, the department’s director general of the business tax group.
The Public Accounts Committee hearing will examine what it described as corporate “tax deals” between multinational companies and the UK government. “The Government has a responsibility to assess and collect tax due from all taxpayers, without fear or [favor], and taxpayers should pay all that tax which is due,” the committee noted.
A previous hearing in 2012 on the Revenue and Customs department’s handling of corporate tax paid by large multinationals yielded “unconvincing” and “evasive” responses from the companies, the committee said.
In a public statement, British Member of Parliament Meg Hillier, chair of the public accounts committee, said Google’s settlement vindicates the committee’s efforts to get international companies to pay their fair share of taxes on revenues earned in the UK.
The settlement shows that the UK Revenues and Customs department is effectively admitting to collecting too little tax from Google over the past 10 years, Hillier said. “This is not a great success rate and the Public Accounts Committee will be calling in HMRC and Google to explain.”