EU considering probe of Google tax deal in UK

Critics claim the deal, which has triggered a bitter political row, means that Google is paying an effective three per cent rate of tax on its British operations. The announcement came after Margrethe Vestager, a European Competition Commissioner, said on BBC radio that she was ready to investigate Google’s tax settlement provided she received an official complaint.

The controversial tax deal saw Google pay £130 million to the United Kingdom taxman on its profits for the past 10 years.

Ms Vestager said it was “too early” to say if an inquiry would be launched into whether the deal amounted to “illegal state aid”, but Labour MP Margaret Hodge – former chairwoman of the Commons Public Accounts Committee (PAC) – said she should “take a look”.

Italy has brought several cases against global technology companies that have headquarters in low-tax nations like Ireland to avoid paying higher taxes in other countries, like Italy.

French MEP Eva Joly called for Chancellor George Osborne to face questions about the “very bad deal” as she accused him of attempting to turn Britain in to a “kind of tax haven”.

At the same time, the European Union antitrust watchdog on Thursday disclosed plans to investigate the back tax deal agreed to by Google and Her Majesty’s Revenue & Customs after an unnamed person linked to the Scottish National Party voiced concerns in a letter.

“I would say it (the deal) is a success because previously Google was not paying any tax at all”, he said.

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.

Google was suspected to have evaded the taxes through a “stable hidden organization in Italy”.

“If one company doesn’t pay the taxes then obviously this company has a stronger position in that competition”.

On Wednesday, over 30 Organization for Economic Cooperation and Development countries signed an agreement to share information about multinationals in a push to boost transparency following public anger over large corporations playing the system to lower their tax bills.

‘They are beneficiaries of state spending at many levels and in return they would get respect‘.

He said that the Commission had told the tax authorities in Luxembourg to collect more tax from Fiat after an investigation and Dutch fiscal chiefs to do the same with Starbucks. He denied that there was a “special” tax rate for Google, but declined to comment on the company’s specific rate due to confidentiality laws. If Google is found guilty, authorities could require it to pay the back taxes as well as substantial fines.