And yahboo sucks to you Mr. Murphy

By Matt Brittin, Google UK CEO

The Institute for Fiscal Studies explains it very clearly: “The current tax rules are not designed to tax the profits from UK sales…They are instead designed to tax that part of a firm’s profit that arises from value created in the UK.”

Some have suggested the settlement which concluded the audit was a ‘sweetheart deal’, a cut-price tax rate. It was not. Google pays corporation tax on its UK profit at the standard rate – currently 20 per cent – the same as any other business in Britain.

Or, fuck off Murph

40 thoughts on “And yahboo sucks to you Mr. Murphy”

  1. When he appeared before the PAC a couple of years ago along with a couple of other bigwigs (from Amazon and somewhere else) he was the only one who seemed happy to be very open about the what’s and why’s of their tax arrangements. Google aren’t ashamed, and aren’t interested in pretending to be ashamed. It’s refreshing.. but I guess it’s easy to be bold when you really do know ALL the secrets.

  2. right on. anybody with half a brain on this issue should be talking about whether trying to put a location on where value is created is still the right way to think about how to tax MNCs

  3. It’s an essential way to think about how to tax MNCs, or at least it is so long as tax is imposed by individual governments differently. Even a slight difference will mean geography is important.

    The only way you’re going to be able to ignore geography is if there is a single system which applies globally. That will not happen in the short term.

  4. “The only way you’re going to be able to ignore geography is if there is a single system which applies globally. That will not happen in the short term.”

    There’s no harm in highlighting this though, is there? Has anyone been doing anything else?

  5. Watching it, the Google guys should just say “if you don’t believe what we say, or won’t let us answer your questions we might as well go” and just fuck off. Communicating with this bunch of thick posturing MPs is just a waste of their time.

  6. “There’s no harm in highlighting this though, is there? Has anyone been doing anything else?”

    Yes, there are some that have been doing something very different. Examples:

    1) Accusing organisations of wrong-doing or criminal behaviour.

    2) Conflating “pays little or no UK CT” with “pays little or no CT”. Instances where the UK is a beneficiary never seem to be mentioned by UK campaigners.

    And of course, it must never be admitted that this is an EU-level problem, currently beyond the UK’s control, as that might give ammunition to the creeps, weirdos and racists in UKIP.

    See if you can get Prof. Murphy to acknowledge the EU’s role in this regard.

  7. And of course, it must never be admitted that this is an EU-level problem, currently beyond the UK’s control, as that might give ammunition to the creeps, weirdos and racists in UKIP.

    Dammit. I always prided myself on being a fruitcake. Do I have to choose one of the others now ?

  8. Jack C,

    In many cases it’s worse than that: it’s ignoring that “pays little or no UK CT” is because there’s no profit at all in a fast growing business and therefore no CT to pay at all anywhere. It’s rare to see someone quoting sales numbers who is NOT doing this.

  9. Politicians may be confused.

    In their world, stating publicly that one “has done nothing wrong” only ever happens during a forced resignation.

    If Google is claiming, publicly, that they’ve done nothing wrong, then the MP’s will naturally want to know when Google is going to resign, and they’ll want to know the juicy details of Google’s financial and/or other “romping”.

  10. I have no doubt that Google are quite correct, but the UK CEO undermines his position by stressing the number of people there are in the Google UK working in sales, marketing and legal positions. You generally don’t do that unless you ar working on sales and then it begins to look like making sales and carrying on business through a permanent establishment. Where the value is created is largely irrelevant to the extent that any intra-group payments for services/IP are subject to transfer pricing rules.

    At the moment Google can probably get away with saying that there is no PE (or that the PE is not involved in the trade that is making all the sales), but eventually they are going to have to play the good corporate citizen if they want to lobby non-US governments over various issues in their business. As their business matures they will increasingly repatriate cash to the US to pay dividends and when that happens they will be indifferent to paying non-US taxes that are creditable against the US tax on the repatriated cash.

  11. “At the moment Google can probably get away with saying that there is no PE (or that the PE is not involved in the trade that is making all the sales), but eventually they are going to have to play the good corporate citizen if they want…”

    So following the rules is not enough to make you a “good corporate citizen” then?

    Tell me Alex, does this Stalinist standard apply to individuals as well or is it only anti-corporate bigotry that motivates you?

  12. There’s no harm in highlighting this though, is there? Has anyone been doing anything else?

    God, Arnald, you couldn’t be more mendacious if you tried.

    And what’s with this “Oh, we’re just impartial observers thirsting for knowledge” bullshit you’ve been ladling out lately? You really think that kind of shtick is going to work here?

  13. @Ironman, I am certainly not ant-corporate, and if you really want to know I have helped many large multinationals avoid millions and in some cases billions in taxes.

    @Dennis. The clues I have come from my father who was head of European Government Relations for a very large blue computer manufacturer in the 1970s and 80s. They were in a similar position to Google in that most of the technology sold in country A was created/manufactured in country B, but they soon realised that if they wanted to make sales to Government, and more importantly influence government policy and legislation, they were better off not playing fast and loose with the local tax system, or at least not pushing it too far.

  14. Alex –

    I hate to break it to you, but getting opinions from Daddy is a poor substitute for actual knowledge of the subject matter, especially when Daddy is 35 or so years removed from the issue at hand.

    Given that talking to Daddy is all you mention, can we assume you don’t have any actually training or experience in taxation as it relates to large multinational corporations?

    Like I said… Stop pretending.

  15. Speaking as someone who has direct experience of the taxation of large multinational tech businesses, I can confirm that at least some do have an attitude of making sure they are squeaky clean.

    I’ve been told to stop arguing with HMRC on significant (nine-figure sum) points that I was sure I was correct about, because the company didn’t want to be seen as trying anything on – even though HMRC confidentiality meant no-one would be seeing anything anyway…

  16. @Dennis Not unless you count 6 years in the international Financial Structuring group in the tax prectice of one of the Big 4 accounting firms (the bit that did all the Lux and Irish and other multinational structuring) and 20 years working for three different investment banks in tax and asset based finance (cross border tax leasing, hybrid instruments, special allocation partnerships, pref shares, repackaged perpetuals). No, apart from that I am as ignorant as the next man.

  17. So Alex, the ‘Good.Citizen’; I ‘m still fascinated to know your criteria. . your criteria in addition to the law that is.

  18. For example I know two men who fuck each other…One is white ; the other the son of Pakistani immigrants. Good citizens? And who gets to decide?

  19. “There’s no harm in highlighting this though, is there? Has anyone been doing anything else?”

    Yeah, you have you little cunt. You’ve been alleging corrupt sweetheart deals.

  20. @Ironman: “Good corporate citizen” is one that is looked on favourably by the government because of its behaviour. It is part of the business strategy of many companies and is not a totally altruistic behaviour. Part of that behaviour might be to be seen to not pursue aggressive tax strategies, and I have seen many companies turn down tax planning ideas because “it is not the sort of thing we do – it might upset the government”.

    Other behaviours include training/orienting government staff, seconding the company’s staff to government, contributing to industry working groups and standards committees and advising government on legislation and policies. The larger US multinationals used to do a lot of this when they expanded in Europe in the twentieth century because it helped them overcome views in government that preferred national industries.

    As I say, it isn’t altruistic behaviour, and Google have reached the size of company where it will increasingly be in their interests to be able to speak to government about aspects of government policy without any adverse press comments every time they pitch up before an HoC committee.

  21. Alex –

    Then allowing for your 6 years of truly relevant experience in the subject, I find your comments all the more inexplicable.

    Per INTM264050: “There is no permanent establishment in the UK if the activities here, whether through a fixed place of business or an agent, in relation to the business as a whole, are preparatory or auxiliary in character.”

    What part of it don’t you get? Increased expenditures for personnel in sales, marketing and legal might indicate increased business activity – and profitability – but activity and profitability aren’t the relevant issues here… Adding sales and admin staff without establishing PE isn’t an indication of anyone playing ‘fast and loose’ with tax law, nor is it an indication that anyone is less than a ‘good corporate citizen’ (whatever the fuck that might be).

    You know, there’s a difference between trying to pass yourself off as sophisticated via cynicism and putting forth a reasoned opinion, and the difference is important.

    You should have stopped at “I have no doubt that Google are quite correct…” The fact that you didn’t is telling.

  22. I assumed the good citizens thing was along the lines of on the one hand lobbying for conditions that favour you and on the other hand saying you have no permanent establishment will eventually be contradictory.
    The reality is that this doesn’t seem to happen, a case in point would seem to be Uber who are using the EU location rules to minimise tax while arguing for changes in local legislation that will favour them (or at least end the advantage of other groups)

  23. @Dennis As I have said, I have no doubt that their position at the moment is entirely correct, but equally I doubt that they will continue to maintain that position as their business evolves.

    At the moment Google does have a taxable presence in the UK and it does pay UK corporation tax, but only on part of its business. How long that can be maintained is at best uncertain and as I originally posted, I don’t think it is necessarily in Google’s best interest to continue to structure their business in the same way.

  24. “…I don’t think it is necessarily in Google’s best interest to continue to structure their business in the same way.”

    Really? I’d be fascinated to read whatever specific facts you could provide to support that conclusion. Are any of those facts unavailable to Google’s in-house tax staff or the tax staff at E&Y at this time? If not, any specifc reason to suppose they haven’t thought and worked through anything you’ve though of?

  25. @Alex This is a bit of an impertinent question but I want to learn a little. Apart from CT, what other taxes did you help multinationals avoid?

  26. “For example I know two men who fuck each other…One is white ; the other the son of Pakistani immigrants. Good citizens? And who gets to decide?”

    Richard Murphy and HMRC?

  27. “I have seen many companies turn down tax planning ideas because “it is not the sort of thing we do – it might upset the government”.

    Interesting you use the word “government” there. So you are saying companies buy off politicians by overpaying on their tax bills. Politicians illegally threaten companies?
    Fascinating.
    Very banana republic.

  28. @Dennis I am sure that E&Y can think these things through from themselves. If you want to get a little bit technical, if Google are relying on their activities currently being ‘auxiliary in character’, then the decisive criterion is whether or not their activities in the UK form an essential and significant part of the whole enterprise. As the business expands and evolves, the relevant facts will no doubt change, and the merits of Google’s argument may well change too.

  29. @Henry Marsh: Not impertinent at all. Apart from UK Corporation Tax and UK PRT off the top of my head US Federal, French, German, Swedish, Danish, Austrian, Japanese, Canadian, Spanish and Hong Kong Corporate income taxes.

  30. Cheers Alex. Just wanted some reinforcement of my view that CT should be abolished as this is overwhelmingly the tax that the accountancy profession tries to help their clients reduce. A magnitude less effort goes into reducing the other taxes that businesses ( i.e. people, workers, owners, customers ) have to pay. Abolition of CT would surely reduce the price of accountancy services.

  31. “it is not the sort of thing we do – it might upset the government”

    Replace ‘government’ with ‘monarch’ and there’s no real difference is there?

    What you’re suggesting is the replacement of the rule of law with the rule of capricious individual dictators, whether kings, politicians or State employees. We’ve spent the last 1000 years working to move away from that, and you want to bring it back.

    Bravo.

  32. @Jim, I am not advocating anything of the sort, but it happens. People in government have preferences. In this country firms like BAe and Rolls-Royce have no trouble getting access to ministers or support for exports while other firms like Andersen are/were banned from Government work. It happens all over the world, more in some countries than others.

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