Google boss doesn't know his own salary (Has he tried Googling it?)
The chair of the influential House of Commons Public Accounts Committee, Meg Hillier, told Matt Brittin that he was “living on another planet” after he said he did not have the figures for his own salary. Ordinary taxpayers would be angered by his comments and by the settlement for 10 years’ operations in the UK, where the internet giant earned profits of £106 million on revenues of £1.8 billion in the last 18 months alone, she said.
Mr Brittin told the committee he understood public anger over claims that the deal amounted to an effective tax rate of just 3%, but insisted that Google in fact paid corporation tax at 20% on its activities in the UK like any other company.
Ms Hillier told the Google president for Europe, the Middle East and Africa: “Do you hear the anger and frustration out there that with these huge figures, you settled for a figure of £130 million.”
She demanded four times to be told what Mr Brittin was personally paid, but he responded: “I don’t have the figure but I will happily provide it.”
Ms Hillier responded: “You don’t know what you get paid? ... Out there, taxpayers, our constituents, are very angry, they live in a different world clearly to the world you live in, if you can’t even tell us what you are paid.”
Mr Brittin responded: “I understand the anger and understand that people when they see reported that we are paying 3% tax would be angry. But we’re not. We’re paying 20% tax.”
The £130 million figure was “the conclusion of a six-year rigorous, independent tax audit” in which Google offered “full transparency” to HMRC, he said.
The figures reflected the fact that corporation tax is paid not on sales, but on the economic value of activities in the UK, said Mr Brittin. Much of the economic value driving sales in the UK was created by 20,000 engineers writing code in the US.
Google’s 4,000 staff in the UK were outnumbered by the 5,000-plus in Ireland who processed business for the whole of Europe, the Middle East and Africa, he said. And he insisted that Google’s practice of channelling funds through Bermuda “has no impact on the tax we pay in the UK” and is “a commonplace arrangement for American companies”.
But committee member Stewart Jackson (C Peterborough) told him: “You have made a choice to avoid tax and you have set up structures so to do. There is an element here of ‘We are doing the UK taxpayer a favour by paying tax’.”
And David Mowat (C Warrington South) said: “Our concerns are not that you should be taxed on sales, but that you have come up with a number of contrived mechanisms, such as the ‘Double Irish’, the ‘Dutch Sandwich’ and the use of Bermuda.”
Ms Hillier (Lab, Hackney South and Shoreditch) told Mr Brittin: “Frankly, you are taxing my patience and the patience of the hard-working taxpayer out there...
“Don’t you feel a bit embarrassed by the fact that you don’t even know what you are paid? You are living on a different planet to most of our constituents.”
Google Inc’s vice-president Tom Hutchinson told the committee that the £130 million paid to HMRC included £18 million interest, but did not include any fines or payments under George Osborne’s diverted profits tax - nicknamed the Google Tax.
The figure was the largest tax settlement following audit ever paid by Google outside the US, and the company believed it was “fair”, he said. Worldwide, Google was paying 19% tax - very close to the UK rate of 20%.
Mr Hutchinson said: “We are paying the fair amount of tax worldwide. It’s up to governments to decide where we should be paying that tax. I would love to see the system more simple so we wouldn’t have to come to hearings like this to explain it, but we need governments worldwide to take that 19% and split it in a fair way.”
He revealed that the company had paid unspecified additional sums on top of the £130 million in relation to operations in 2004 - before the 10-year period under audit - as well as changes in the way Google dealt with stock-based compensation for tax purposes.
Mr Brittin told the committee that Google had not co-ordinated the announcement of its tax settlement with Mr Osborne, who hailed it at the time as a “victory” for the Government. He insisted: “This is the result of an independent process and it’s the amount of tax we were required to pay. It’s not a deal and there’s been no political involvement in the HMRC process.”
He acknowledged tax “will have come up from time to time as a question” in the company’s meetings with Government ministers, but said Google “never sought or had a meeting” with ministers about the audit.
HMRC chief executive Dame Lin Homer denied that large companies like Google were given preferential treatment in comparison to small firms, telling the committee: “It is exactly the same system we apply to everyone ... We then apply exactly the same approach to expecting back payments and fines.”
But HMRC’s director general of business tax Jim Harra acknowledged that imposing fines on large companies was “quite a challenge”, as taxmen have to prove not only that the self-assessment return was wrong - which he said it was in Google’s case - but also that insufficient care was taken in preparing it.
Committee member Caroline Flint (Lab, Don Valley) told him taxpayers would find it “hard to believe” that Google had paid no fines, adding: “It seems if you have got hired guns in the form of lawyers and tax people, big companies can get away with it.”
Mr Harra said that the £130 million recouped from the HMRC investigation represented “a very substantial amount” of the total £196.4 million paid by Google in corporation tax and interest over the 10-year period.
There were already signs that large companies were paying more corporation tax to avoid the diverted profits tax, introduced in 2015 to impose levies at a higher rate on sums believed to have been shielded from corporation tax.
A Google spokeswoman later declined to reveal Mr Brittin’s salary.