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Sunday 29 May 2016

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Google's tax deal with Government 'not a glorious moment', admits Sajid Javid

Published 31/01/2016

Google will pay £130 million in back taxes covering the last decade
Google will pay £130 million in back taxes covering the last decade

The tax settlement between Google and the Government "wasn't a glorious moment", the Business Secretary has admitted.

The Government came to an agreement with the internet giant which will see £130 million paid in back taxes covering the last decade.

And while George Osborne initially labelled the deal a "major success", Sajid Javid told the BBC's Andrew Marr Show that he shares the feeling of many people that there is a sense of "injustice" with the deal.

The Business Secretary said: "It wasn't a glorious moment, when people look at these issues, but it is important, I think, to talk about also what the Government is doing."

Mr Javid was asked if he agrees it is unfair that a large corporation like Google can speak directly with the Government and HMRC about its tax affairs while small and medium businesses don't have that option available to them.

"I speak with thousands of companies, small and medium sized as well as of course large companies, and there is a sense of injustice with what they see," he said.

"They do look at this and they say 'look, I don't operate all these multiple jurisdictions around the world, I can't shift profits around, what about me, where's the level playing field?' and I share that sense and the sort of sense of unfairness that exists."

The agreement between Google and HMRC has sparked a fierce political row, with critics labelling it a "sweetheart deal".

Meanwhile, the settlement could be investigated by the European Commission following complaints from the SNP and Labour.

However, Mr Javid insisted the deal was a success.

"The way in which it was a success is that it helps to change behaviour," he said.

"It is absolutely clear to me, I think when other companies, other large companies, they look at this and they see that HMRC no matter how long it takes - I think this particular investigation if I am not mistaken took five or six years - that HMRC will not give up, they will come after you if they feel you are not paying your fair share in taxes."

Google's vice president of communications and public affairs, Peter Barron, also appeared on the Andrew Marr Show and defended the settlement.

"In the UK we pay corporation tax at 20%, there is no sweetheart deal, it is absolutely the same corporation tax rate as everybody else," he said.

Mr Barron was asked if he believes Google lives up to its corporate motto: "Don't be evil."

He said: "I think we do, absolutely. In everything that we do across the business we always try to do the right thing."

Responding to a report in The Observer that Google will tomorrow announce £30 billion of profits held in the tax haven of Bermuda, Mr Barron said the arrangement has no impact on the amount of tax it pays in the UK.

He said: "It's very, very important to make it clear that the Bermuda arrangement has absolutely no bearing on the amount of tax that we pay in the UK. No bearing whatsoever."

When asked how much of the £30 billion may have come from the UK, he said: "I don't know the answer, I haven't got the answer to my fingertips, except I would say that about 10% of global revenues come from the UK."

Meanwhile, Mr Javid rejected the accusation that the UK Government is defending the island's tax haven status from EU attack.

"I don't think that's the case at all," he said.

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