Google and HMRC could face an investigation from the European Union over the company’s £130 million tax deal.
The deal was heralded as a “victory” by the UK government, but both the Labour Party and Scottish National Party have questioned the specifics of the deal and the amount of tax being paid. Both parties said they now intended to file complaints.
And when the complaints are made, it seems likely the EU will investigate. Margrethe Vestager, the EU competition commissioner, said “sweetheart deals” for large multinational companies could count as “illegal state aid”. Speaking on BBC Radio 4’s Today show she said “if someone writes to us and says this is maybe not as it should be, then we will take a look”.
According to Labour’s Jon McDonneell the deal needs to be probed to ensure it doesn’t “undermine our tax system” and that there needed to be greater transparency about how it was struck.
A SNP spokesperson said there was “a palpable sense of scepticism” about how the deal was reached. The party called for “independent verification that Google has not been extended” the luxury of “negotiating down” the amount it had to pay.
The tax deal, which was struck on 23 January, was hailed as a “victory” by Chancellor George Osborne. It has since been criticised for being too lenient. The payment was agreed by Google after negotiations with Her Majesty’s Revenue and Customs (HMRC). The firm will pay £46.2m in taxes on its UK profits of £106m for the 18 months to June 2015 — the rest of the figure is made up of historic taxes.
Despite Google coming under fire, its executives have said they are happy to be grilled over the deal by MPs in February.
The company previously faced the Public Accounts Select Committee in 2013 when its chair Margaret Hodge asked about tax dodging. Google said the criticism it received did not reflect how international tax work.
“After a six-year audit by the tax authority we are paying the amount of tax that HMRC agrees we should pay,” Google said in a statement following the deal. “Governments make tax law, the tax authorities enforce the law and Google complies with the law.”
Prime minister David Cameron has distanced himself from the word “victory” in the wake of the announcement, but did argue the government had “cracked down” on tax collection.
Rupert Murdoch also weighed in on the debate. In a series of tweets he claimed that Google had put up a “brilliant new lobbying effort” and also said the “posh boys in Downing St” were “awed” by the technology company.