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Google tax affairs leave a bitter taste

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Here are a few phrases to Google: "misleading information", "tax evasion" and "lies". The search engine that became a global superpower, Google, is being summoned before the relatively impotent UK Parliament to answer further awkward questions about their tax affairs.

Quizzed previously, Matt Brittin, Google's vice-president for Northern Europe, airily assured MPs that his ad sales team was based in Ireland (and thus subject to the rather more flexible Irish tax regime) and that the UK staff were merely concerned with marketing Google as a potential advertising space. Such arguments were used to defend the rather unpalatable fact that Google paid just £6 million of tax on its 2011 profits of £2.6 billion.

Without going as far as using the nasty word "lie", a Reuters investigation suggested that Brittin might not have been entirely candid about the responsibilities of the Google UK employees. Their research suggested that the UK staff "target, negotiate and close sales of Google's advertising products to its customers". Clients told Reuters that deals were done in London, and only a Dublin address on the invoice suggested that this wasn't a UK operation.

The revelations would make Google's tax liability excuses look pretty threadbare. Margaret Hodge, chair of the Commons Public Accounts Committee, said that the Reuters allegations were very serious. "We need to ensure that what they told us first time around is not being economical with the truth," Hodge said. "It's difficult to reconcile the statements made by the witness and the evidence Reuters has uncovered."

Google is sticking by its story, calling the Reuters report "wilfully misleading". "We comply with the tax rules in the UK and in every other country in which we operate," they claimed. Even after taxes, Google isn't exactly short of spare funds with which to hire the kinds of lawyers and tax specialists adept in running rings round mere parliamentarians.

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