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EU says prepared to probe UK Google tax deal

28 January 2016, 15:07 CET
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EU says prepared to probe UK Google tax deal

Margrethe Vestager - Photo EU Council

(LONDON) - The EU's competition commissioner said Thursday she was prepared to investigate Google's tax deal with Britain as the US Internet giant insisted it complied with all taxation laws.

Google announced Friday it was to pay GBP 130 million ($185 million, 170 million euros) in back taxes following a probe into its tax arrangements, unleashing a storm in Britain.

The European Union's competition executive said it was too early to say whether Google's arrangement amounted to a so-called sweetheart deal.

However, "if we find there is something to be concerned about, if someone writes to us and says this is maybe not as it should be, then we will take a look", Commissioner Margrethe Vestager told BBC radio.

A spokesman for British Prime Minister David Cameron said: "It's up to the (European) Commission whether or not to decide to investigate.

But the British tax authority "has been clear they have collected all the tax that is due," he added.

The opposition Scottish National Party's economy spokesman Stewart Hosie said they had sent a letter to Brussels calling for a probe.

European Commission spokesman Ricardo Cardoso said the letter had been received, adding: "As always the Commission will look at it and assess".

Google meanwhile defended itself, saying it had met its tax law obligations.

Peter Barron, Google's communications vice-president, said the company paid the standard 20 percent corporation tax on the profits generated by its activities in Britain.

"After a six-year audit we are paying the full amount of tax that Her Majesty's Revenue and Customs (HMRC) agrees we should pay, including GBP 130 million in additional back tax," Barron said, in a letter to the Financial Times newspaper.

"Governments make tax law, the tax authorities independently enforce the law, and Google complies with the law."

Google executives and HMRC officials are due to be grilled by parliament's public accounts scrutiny committee over the deal, on February 11.

On Wednesday, more than 30 OECD countries signed an agreement to share information about multinationals in a push to boost transparency and combat corporate tax avoidance.

- 'Token amounts for PR' -

Cameron was forced to defend the tax deal in parliament on Wednesday and disputed claims that Google's effective tax rate was three percent.

His Downing Street office on Thursday sought to play down reports that Paris and Rome had succeeded in securing far tougher settlements with Google.

"My understanding is that the French and Italians have said how much tax they would like Google to pay. Let's see what is actually paid," a Downing Street source said.

However, one of Google's biggest shareholders in Britain urged the technology giant to pay "much more" tax in the UK.

James Anderson's Scottish Mortgage Investment Trust owns GBP 120 million of shares in Google's parent company, Alphabet.

"It is in the long-term interests of Google and others of that ilk to pay decent rates of tax," he told The Times newspaper.

"In return they would get respect."

Meanwhile, global media baron Rupert Murdoch weighed in, saying on Twitter that Google was "paying token amounts for PR (public relations) purposes. Won't work. Need strong new laws to pay like the rest of us."


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