Introduction: A published MPs report alleges that Google has avoided taxes thru questionable tax arrangements.
As Chair of the Committee of Public Accounts, the Right Honorable Margaret Hodge (Member of Parliament) revealed that large internet company Google paid the UK government merely $16 million in taxes despite having accrued substantial turnouts of $18 billion from 2006 until 2011.
According to the MPs report, in an apparent bid to avoid paying taxes, Google allegedly sought refuge from paying its tax obligations to the UK government by focusing its advertising sales outside the UK, specifically in Ireland. Former employees of the giant internet company have revealed that staff based in the UK participates in the company’s advertising sales efforts, thus making the company’s argument highly questionable. In defense, Google strongly contended before the committee that it had practiced arrangements for settling its taxes with the UK government in a tenable and legitimate manner according to established tax codes. The company also agreed that its engineers perform product development in the UK, which renders indefensible its argument for its overly planned tax structure. This arrangement, according the MPs report, was Google’s method to avert paying established corporation taxes to the government of UK.
The allegations of avoidance of taxes against Google and several other large multinational corporations, such as Amazon and Starbucks, have not been centered on the company alone, as they have also rendered questionable Her Majesty’s Revenue and Customs (HMRC) office. The bigger problem lies in large accountancy companies that offer spurious configurations for avoidance of taxes to the UK government.
Conclusion: The reputation of large multinational companies has been damaged by the promotion of artificial tax structures by big accountancy firms in the UK.
Bureau of Internal Revenue (BIR) commissioner Kim Henares emphasized in the course of criticism that the BIR has gone cheating on asking the small-time individuals to pay taxes and getting the rich people away from any tax obligations.
Henares also addressed this leakage towards self-employed and professional workers who are not giving up their financial obligation to the government.
The Professional Regulations Commission hereby showed that there were 3 million registered professionals, among them doctors and lawyers who earned more than their waged worker counterparts.
Taxpayers remitting their shares fairly would have had a big impact to the progress of the country and would be able to reach a collection goal of Php 768.3 billion, 62.7 percent of BIR’s total collection goal (Php 1.225 trillion) for this year.
To counter this problem, the government plans to enhance the audit process through the use of technology and information-based solutions. These would help to identify the country’s taxpayers which are at high-risk of non-compliance.
It also intends to improve information linkages with other government agencies through statistical analysis.
If all are traced reasonably, it would be a good implication that the country tends to boost its revenue collection for the implementation of the local and national projects; giving rise to the law-abiding citizens and a fair status at all levels of the society.
It turns out big corporations are not paying as much as they ought to pay on taxes. Corporations are expected to pay as much as 35% on federal income tax, but congress investigation reveals that large companies pay less than half of that amount on the average.
The Government Accountability Office recounted that these companies paid 12.6% in 2010. Ironically, these companies are also seeking cuts on corporate tax. This report came out during the time when the government was keeping budgets tight and their increased awareness regarding clever tax cutting tactics of corporations.
According to Senator Carl Levin, American companies are frequently complaining about the 35% top tax rate, but they barely pay as much. In fact, they barely pay close to that amount. The Michigan Democrat knows the top tax rate is one of the highest in the world. In May, he issued a report that specifies the tax avoidance of Apple Inc. Note that he also looked into the low taxes of Microsoft.
The GAO report did not reveal companies that pay only a third of the top rate. However, there seems a trend of paying lower taxes. Earlier reports indicated companies paying between 20 and 30 percent in taxes. New IRS data and public financial statements exposed that profitable corporations are not really meeting top tax rates.
President Obama, together with some legislators, has advocated lower taxes for corporations.
A report published by GAO in April indicates a rise in annual cost of breaks on corporate taxes. It has risen more than twice since 1987, reaching 180 billion dollars.