Friday, February 12, 2016

Google Says U.K.'s Google Tax Doesn't Apply to Google (GOOGL)

From LearnBonds:

Alphabet Inc (GOOGL) Says UK’s ‘Google Tax’ Doesn’t Apply To Them
Alphabet Inc (NASDAQ:GOOGL)’s top tax executive told UK authorities that the new UK tax – popularly called “Google Tax” – will not apply to the Internet firm, says a report from Bloomberg. The tax – the Diverted Profits Tax – came up last year owing to rising concerns that Alphabet and other tech firms are using loopholes to transfer profits to offshore tax havens.

“Google Tax” does not apply to us
So, to discourage transfer to offshore tax havens, the UK officials introduced this so-called “Google tax,” which allows the govt. to charge 25% tax on any profits it believes have been moved out of the US improperly. Standard corporate tax rate in the UK is 20%.

However, Alphabet’s VP for finance – Tom Hutchinson – speaking to a Parliamentary committee, which is investigating Google’s 130m-pound ($188 million) settlement with the U.K. tax authority, said the new tax does not apply to the firms past profits.

“Because of our agreement with the HMRC we are paying the right amount of tax, so we are not having to pay anything else,” the executive said.

Alphabet Inc (NASDAQ:GOOGL) has been using tactics like the “Double Irish” and “Dutch Sandwich,” to shift its profits to a Bermuda subsidiary, Bloomberg reported in 2010. But, in Thursday’s hearings, the executive said such strategies has no effect on the tax the firm paid in the UK. Transferring of profits to Bermuda has been designed to lower the taxes in the US, the executive said.

“Under the rules in the U.S., this structure makes sense,” he said. “I don’t think this is an aggressive structure.” Hutchinson said his duty is to efficiently manage the tax affairs of his firm, and Alphabet paid 19% as tax around the world, “a fair amount of tax to pay.”

Alphabet executive does not know his salary...