Ministers face grilling over Google back tax deal

Published: Wednesday 27th January 2016 by The News Editor

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Ministers are facing fresh pressure over Google’s tax deal amid claims Italy is poised to secure a back payment equivalent to 15% of the company’s revenues in the country.

Prime Minister David Cameron, Chancellor George Osborne and other senior figures are also under close scrutiny over their links to the internet giant – including a series of meetings with executives.

Downing Street has insisted the £130 million settlement covering the last 10 years was a “good deal” while HM Revenue and Customs (HMRC) said it was collecting the “full tax due in law”.

But there are growing calls for greater transparency, with London mayor Boris Johnson urging “clarity” on where Google’s profits are made.

Shadow chancellor John McDonnell has written to Mr Osborne demanding details of the settlement and questioning whether he or anyone else from his team in Number 11 was involved in the arrangement.

He asked when Mr Osborne was first aware of the deal and whether he or a ministerial colleague personally signed it off.

Mr McDonnell also wants to know whether Number 10 was involved in discussions of the deal before it was announced.

Claims that the settlement covering the decade from 2005 amounted to a 3% tax rate have been rejected by officials and ministers, but Mr McDonnell asked: “What is HMRC’s understanding of the effective tax rate faced by Google over the past 10 years as a result of this settlement?”

Citing reports that HMRC had not challenged Google’s assertion that it did not have a “permanent establishment” in the UK, Mr McDonnell said the issue was “obviously critical”.

Government records show that Mr Cameron and Mr Osborne have met Google executives three and four times respectively.

The firm’s former chief executive and now executive chairman Eric Schmidt also served on Mr Cameron’s business advisory board until July.

According to The Times, Google is preparing to hand over 150 million euros (£113 million) in back taxes to the Italian authorities – equivalent to 15% of its one billion euro revenues in the country – although it is not yet clear how many years the dispute relates to.

Published: Wednesday 27th January 2016 by The News Editor

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