GOOGLE’s claim that all its real business is handled through its European HQ in Dublin while its multiple UK offices exist merely to count the paperclips, organise staff leaving collections and do the morning coffee run is further undermined by evidence it gave to an employment appeals tribunal in the Irish capital in 2013.
Rachel Berthold had been sacked in May 2011 from a position as a “level six” manager, which the tribunal heard put her in the top seven percent of employees in Google’s Dublin office.
Anne-Catrin Sallaba, her former boss as Google Europe’s Head of Publisher Services, gave evidence to the tribunal that Berthold had failed to meet performance targets – but Sallaba had to cross the Irish sea to do so, given that as Berthold’s line manager she was employed in, er, London.
Berthold was eventually awarded €100,000 for unfair dismissal. Sallaba has in the meantime been promoted twice, and now rejoices in the job title “Senior People Development Manager, Head of Global Onboarding” – still in London!
George’s gesture politics
THE big gap between what Google pays in tax and what, on any reasonable view, it should pay is down to a defective tax system which George Osborne has failed to tackle in nearly six years as chancellor – despite his rhetoric.
The woeful lack of expertise within HM Revenue & Customs itself following the “light touch” years of underinvestment and general lack of interest in collecting tax from big companies, cannot have helped. Any shortfall on what HMRC should have collected is likely to be explained in part by HMRC having been out-gunned by Google’s lawyers and tax advisers, Ernst & Young.
The so-called “Google tax” Osborne announced in 2014 was more political gesture than tax-raising measure and appears not to have applied to Google itself. The change didn’t tackle the underlying problem: multinationals shifting assets and capital into tax havens.
Multinational tax dodging
On this latter score Osborne has in fact helped big companies. In 2012 he brought in a tax rate of what is now between 0 percent and 4.5 percent for profits that UK multinationals shift into tax havens by routing internal finance through countries like Ireland and Luxembourg.
Meanwhile, he has persisted with laws that allow major companies to wipe out their UK tax bills by placing the cost of funding worldwide businesses (but not the profits) in the UK. The effect, one accountant told the Eye in 2013, was making “a net sort of minus 15 percent” tax rate possible (Eye 1349). As the last Eye revealed, this and other tax breaks leave half the FTSE top 10 companies paying no corporation tax, and the others very little.
The OECD, coordinating global efforts to clamp down on multinational tax dodging, has since recognised these rules as harmful. But the companies are fighting back, as revealed by the minutes of the recent meeting of the Treasury’s “business forum on tax and competitiveness” - chaired by tax minister David Gauke and attended by the heads of tax from major recipients of the tax breaks: Diageo, GlaxoSimthKline and Vodafone.
Discussing the OECD plans, “the business community was particularly focused on interest deductibility” – in other words, Vodafone and co are lobbying a receptive government to keep the tax break that eliminates their UK tax bill. To the extent that the Google deal “vindicates” Osborne’s approach to corporate tax as he claims, it does so as a testament to his ongoing giveaway.