Read as much as you want on BostonGlobe.com, anywhere and anytime, for just 99¢.

UK lawmakers claim Google dodges taxes

Margaret Hodge, chairwoman of a Parliamentary committee, criticized Google vice president Matt Brittin as well as the US search giant on Thursday, saying Google uses “smoke and mirrors to avoid paying tax.”

Photos by Reuters

Margaret Hodge, chairwoman of a Parliamentary committee, criticized Google vice president Matt Brittin as well as the US search giant on Thursday, saying Google uses “smoke and mirrors to avoid paying tax.”

LONDON — UK lawmakers subjected search giant Google to blistering criticism Thursday, accusing the US Internet company of playing games with Britain’s tax rules to avoid paying what it owed.

In his second appearance before Parliament in roughly six months, Google vice president Matt Brittin tried to defend his company’s complex corporate structure to a committee of skeptical UK politicians, many of whom seemed unconvinced by his assertion that Google was being transparent about how it paid its bills.

Continue reading below

After two hours of sharp questioning, committee chairwoman Margaret Hodge accused Brittin of ‘‘devious, calculated and, in my view, unethical behavior in deliberately manipulating the reality of your business in order to avoid paying your fair share of tax to the common good.’’

‘‘You are a company that says you do no evil and I think that you do do evil in that you use smoke and mirrors to avoid paying tax.’’

Brittin countered that Google’s employees ‘‘fully comply with the law.’’

Google is one of several major multinationals — including Amazon, Facebook, and Starbucks — whose convoluted corporate structures and disproportionately low tax bills have drawn increased attention in Britain and elsewhere.

Google has attracted particularly close scrutiny. The company has paid less than 0.1 percent of its billions in UK revenue back to the government in taxes. In the first quarter of this year it made $1.3 billion in revenue from the UK, according to a Google release. The company justifies low taxes by saying that the overwhelming majority of sales actually occur at the company’s European head office in Dublin.

The ins and outs of what makes a company’s revenue taxable in Britain are complicated, but much hinges on where the sales take place. At his first hearing back in November, Brittin said that sales didn’t take place in Britain. Staff at Google’s London office promoted the company’s products, he said, but the sales took place in Ireland — which has a 12.5 percent corporate tax rate.

An investigation by the Reuters news agency cast doubt on those assertions, revealing that Google advertised for sales jobs in London, that London-based Google employees advertised themselves as sales people on professional networking profiles, and that many of Google’s clients believed that the London staffers they were dealing with were sales people.

Brittin acknowledged that Google employed ‘‘people with sales skills.’’

‘‘Some of them have sales in their title,’’ he said. ‘‘I’m sure customers will feel they feel sold to by the teams.’’

But they weren’t, he insisted.

‘‘No money changes hands,’’ he said. ‘‘To be clear the transaction is completed with Google Ireland.’’

Lawmakers were unimpressed.

‘‘It doesn’t make sense to your own staff, it doesn’t make sense to this committee, and it doesn’t make sense to your own clients,’’ said Hodge. ‘‘The only one it makes sense to is Google.’’

Loading comments...
Subscriber Log In

You have reached the limit of 5 free articles in a month

Stay informed with unlimited access to Boston’s trusted news source.

  • High-quality journalism from the region’s largest newsroom
  • Convenient access across all of your devices
  • Today’s Headlines daily newsletter
  • Subscriber-only access to exclusive offers, events, contests, eBooks, and more
  • Less than 25¢ a week
Marketing image of BostonGlobe.com
Marketing image of BostonGlobe.com