A row over Google's tax bill has sparked a wider debate about the UK's corporate tax system, with experts warning that it may not be collecting billions in revenues. According to the Institute for Fiscal Studies (IFS), Google paid just GBP 130m in corporation tax between 2010 and 2015, a sum that many have deemed too low given the company's massive profits in the UK.
The IFS has found that many multinational corporations, including Google, use complex tax structures to avoid paying full corporation tax. This can involve setting up subsidiaries in low-tax jurisdictions or using transfer pricing to shift profits to countries with lower tax rates. The result is that companies can pay significantly less tax than they would if they were operating in the UK alone.
Experts warn that this is not just a Google problem, but a widespread issue that affects many multinational corporations. The IFS estimates that the UK is losing out on billions of pounds in tax revenues as a result of these complex tax structures. This is particularly concerning given the UK's public finances, which are under significant pressure due to Brexit and other factors.
The row over Google's tax bill has sparked calls for reform of the UK's corporate tax system. The Labour Party has promised to crack down on tax avoidance by multinational corporations, while the Liberal Democrats have suggested introducing a 'Google tax' to close loopholes in the current system. Meanwhile, the Conservatives have defended the current system as fair and effective.
The implications of this row are significant, with many arguing that it highlights the need for greater transparency and accountability in corporate tax. The IFS has called for the government to publish more data on corporate tax revenues, as well as to introduce measures to prevent multinational corporations from using complex tax structures to avoid paying full corporation tax.