Google tax

[centurian]

We don't need more tax laws, we just need the ones that we have to be applied. Either Google et al are already moving profits offshore for the express purpose of avoiding tax, or they are not. If they are not, then STFU, and if they are, then prosecute under existing tax laws.

WHS - transfer pricing is already illegal, although proving it is tough.

But if you can't prove they are engaging in transfer pricing - you can't prove they are shifting profits offshore - as one is effectively the mechanism for the other.

[MicrosoftBob]

WHS - transfer pricing is already illegal, although proving it is tough.

But if you can't prove they are engaging in transfer pricing - you can't prove they are shifting profits offshore - as one is effectively the mechanism for the other.

They don't need to prove it, they just to need to deem it in a hypothetical non existent arms length contract between companies i.e. IR35 for multinationals

I bet HMRC haven't the guts to go against people who will fight back though and have deeper pockets

[Zero Liability]

And if they just relocate or up prices as a result it is that much more immediately obvious what detriment it has to the economy. IR35's is better disguised; perhaps FLCs will 'fix' that.

[d000hg]

Companies can put prices up if they wish to, regardless. Saying "we shouldn't make them pay tax because they'll raise prices" is hardly a great argument. It potentially means they're not able to undercut local companies which could promote more competition (OK not too many competitors for Google but they're only one company).

[Zero Liability]

True, they might just reduce returns to their factors of production instead. If this is about getting them to pay for services rendered to them, itemise them and send them the bill. That'd be an amusing exercise. In fact, they should do that at all levels. Osborne made some headway on it. We'll see how many of these 'services' are then valued to the extent that the government believes they are.

Irrespective of how they cope with it, it will have an impact on their operations here, and that is all that is being pointed out.

[VectraMan]

Companies can put prices up if they wish to, regardless. Saying "we shouldn't make them pay tax because they'll raise prices" is hardly a great argument. It potentially means they're not able to undercut local companies which could promote more competition (OK not too many competitors for Google but they're only one company).

I suppose it possibly is good for UK search engine-advertising business (didn't someone on here do something like that?), but the far greater number of businesses that might use Google for advertising are having to pay a higher price than their foreign competitors because the UK is the only one with a Google tax. If Google just pass on the tax then it's a tax on the UK's hi-tech IT industry, which the government are always going on about promoting.

The problem is the internet means people like Google are genuinely global, so talk of local taxes are futile. What it needs is for the international community to come together and agree how companies like Google should be taxed.

[d000hg]

I don't think it's unreasonable that Google is taxed on the income generated in each territory, according to the local laws (if it can be enforced). When Carlsberg sell their lager in different countries, it costs different amounts and is marketed and even branded in different ways based on many factors.

If UK companies end up paying more then the solution would be to offer concessions to those companies. I can't see "you shouldn't fix one problem because it might have a knock-on effect" is a good argument. If something is broken, fix it. If this causes a new problem or has a knock-on effect, fix that too. And so on. "It's all tulip but on average it sort of balances out" doesn't seem the way to go

[VectraMan]

I don't think it's unreasonable that Google is taxed on the income generated in ear territory

But where is the income generated? Starbucks is pretty clear, but if Google phone me up from Ireland and sell me some advertising, is the income generated in Britain? And if it is then does that mean I can't make a one off software sale to the US without registering for and paying US taxes?

[d000hg]

The US can get tricky in some cases, I've had to fill in stupid forms before

But in your example, is your invoice coming from Eire, in Euros? Or is it an Irish call-centre, or something else?

[VectraMan]

But in your example, is your invoice coming from Eire, in Euros? Or is it an Irish call-centre, or something else?

Presumably it's an Irish salesman, in Ireland, but targeting UK businesses and so invoicing in pounds.