Tories lobbying to protect Google’s £30bn island tax haven
Tories lobbying to protect Google’s £30bn island tax
haven
Opposition figures react angrily to news that government
has objected to EU’s proposed blacklisting of Bermuda as ‘unhelpful’
Daniel Boffey Observer policy editor
Saturday 30 January 2016 18.37 EST Last modified on
Sunday 31 January 2016 07.36 EST
Britain has been privately lobbying the EU to remove from
an official blacklist the tax haven through which Google funnels billions of
pounds of profits, the Observer can reveal.
Treasury ministers have told the European commission that
they are “strongly opposed” to proposed sanctions against Bermuda, a favoured
shelter for Google’s profits and one of 30 tax jurisdictions in Brussels’
sights.
The disclosure is made in a memorandum circulated among
Tory MEPs in Brussels that describes potential “countermeasures” against
blacklisted tax havens as “unhelpful”.
Google is expected to announce on Monday that it has
amassed £30bn of profits from non-US sales in Bermuda, where companies are not
liable to pay corporation tax. The UK is Google’s largest non-US market,
accounting for 11% of its global revenues, according to documents filed in
America.
The revelation follows widespread condemnation of the
“sweetheart” deal struck between HMRC and Google that saw the internet giant
agree to pay only £130m in back taxes on the estimated £7.2bn that it earned in
profits over the past decade.
Despite the outcry, chancellor George Osborne has
insisted that the settlement is a “major success” and denied being soft on tax
avoidance.
■
Britain has complained to the European commission about an EU blacklist
designed to hit tax havens, including Bermuda, describing it as “misleading and
deeply unhelpful” and rejecting suggestions of “countermeasures”.
■ Tory
MEPs were instructed on six different occasions last year to vote against
proposals that would clamp down on multinationals that engage in aggressive tax
avoidance.
■ A
transcript of an interview from 2006 with Real Business magazine has emerged in
which David Cameron says he believes Google has “headquartered” elsewhere
because “we’re no longer tax-competitive”. Osborne warned in the same year that
Gordon Brown’s government was “pricing Britain out of the future” with its tax
demands on the search company.
The shadow chancellor, John McDonnell, said that the
revelations marked out government ministers as “hypocrites”. He said: “The mask
has finally slipped. The Tories have been saying they want to clamp down on tax
avoidance to the British people, but when they think our backs are turned they
are telling their MEPs to oppose any measures to make it happen.
“The truth is they run a ‘don’t know, don’t care’
approach to tax avoidance.”
Liberal Democrat MEP Catherine Bearder said: “It is
shameful that the government talks tough on tax avoidance at home, while
secretly opposing the measures needed to tackle it abroad.
“This hypocrisy has got to end. Britain must start being
part of the solution to tax avoidance, not part of the problem.”
The Treasury officials’ note, circulated in June, informs
MEPs: “The UK has taken up with the commission that this list is misleading and
deeply unhelpful. The communication also suggests that the commission might
coordinate member state blacklists and a range of countermeasures. The UK is
strongly opposed to this. It would extend competence and not provide a
proportionate, tailored response to improve global tax transparency.”
On six occasions in the past year, Tory MEPs opposed
proposals designed to squeeze more money out of big companies, including a vote
last month on imposing sanctions on companies using tax havens. In November,
Tory MEPs also voted against mandatory country-by-country reporting on tax
receipts and the automatic exchange of information on tax rulings across
borders.
In October they opposed the automatic cross-border
exchange of information relating to companies’ tax planning within the EU.
And Tory MEPs voted in July against giving assistance to
tax administrations in developing countries to tackle tax evasion. In March and
January, Conservative and Ukip MEPs voted against a report calling for action
to tackle tax avoidance, tax evasion and aggressive tax planning and a motion
calling for the commission to commit to clamping down on tax fraud through
legislation.
The MEPs’ voting record will have been a boost to Google
which regards many initiatives emanating from the EU as a major risk to its
business.
According to the latest accounts filed with the EU’s
register of transparency, Google has 10 employees lobbying in Brussels, where
it spent £2.7m on promoting the goals of the company in 2014.
The internet giant also held 67 meetings with members of
the European commission last year, including with a senior official who works
with the European commissioner, Pierre Moscovici. Moscovici last week announced
plans to clamp down on “aggressive tax avoidance”.
A Treasury spokesperson said: “It is simply wrong to
suggest the UK is anything other than at the international forefront of
tackling aggressive tax planning, avoidance and evasion.
“The government has led the way in the G20 to strengthen
international rules that counter aggressive tax planning by multinational
companies, and supported global tax transparency through the automatic exchange
of information, which will help HMRC to crack down on tax evasion.
“All of the UK’s Crown Dependencies and Overseas
Territories are early adopters of this new global standard. This is all in
addition to introducing the world-leading diverted profits tax which stops
companies moving profits to tax havens.”
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