Whistleblowers enter Amazon & Google tax avoidance fray

Whistleblowers are adding to the case challenging the tax avoidance tactics of Amazon and Google in the UK.
Amazon’s European headquarters are in Luxembourg and Google’s in the Irish Republic – the two companies can therefore benefit from those countries’ lower corporation tax rates and minimise their UK tax obligations.

However, just as a UK parliamentary committee was hearing evidence about businesses avoiding tax by locating themselves outside the country, two UK-based Amazon suppliers reported that their transactions were handled entirely by staff in the London area.

A music publishing executive said: “I did millions of pounds of sales to Amazon. All buying and marketing was negotiated and run through Slough. I never heard anything from Luxembourg.”

Official records show that Amazon UK had sales of £4.2bn ($6.37bn, €4.96bn) last year and paid £2.4m ($3.64m, €2.83m) in tax, representing a tax take of about 0.06% of income. Amazon responds that it pays “all applicable taxes” in the jurisdictions where it operates.

Dealing with Google at the public accounts committee, chairperson Margaret Hodge accused it of “deliberately manipulating the reality” of its trading and said she had whistleblowers’ revelations that UK Google staff had sold advertising and invoiced UK customers. Hodge told vice-president Matt Brittin: “You are a company that says you do no evil. I think that you do do evil in that you use smoke and mirrors to avoid paying tax.”

She said “a stream of whistleblowers” confirmed Google sales were conducted in the UK. 
She had seen a Google invoice from a London address and a selling presentation involving UK staff, and a senior salesman had claimed he was paid commission for selling and “closing deals”. 

Hodge told Brittin: “It was quite clear from all that documentation that the entire trading process and sales processes took place in the UK. “I would ask you to reconsider what you are telling us, because it doesn’t make sense to your own staff, it doesn’t make sense to the committee, it doesn’t make sense to any of your clients.”

The most recent evidence has come from Barney Jones, a former Google executive, who claims to have 100,000 emails and documents showing that contracts were signed in London with UK customers and payments made into a UK account, even if the deals were technically booked in Dublin.

Brittin insists transactions are in the Irish Republic even on sales promoted in the UK.
Hodge told him: “If sales activity is taking place in the UK, you are misleading both parliament and the taxpayers in suggesting that it is not happening.” She warned that misleading parliament was “a very serious offence”.
Google’s own reaction is that it observes UK tax rules.

Hodge also criticised Lin Homer, the tax authority chief executive, for an interpretation that “belies common sense”. She said: “I think your staff are being bamboozled.”

Homer retaliated that officials followed the law, which government would have to change in order to collect taxes that people believed were due.