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EU Commissioner Confirms She Will Investigate Google Tax Deal If Asked

It is believed both Labour and the SNP have made formal complaints about the company's tax settlement.

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Francois Lenoir / Reuters

The EU's competition commissioner, Margrethe Vestager, has said she would be prepared to look at Google's tax settlement with Britain, should she receive a formal complaint. The SNP's economy spokesman, Stewart Hosie, says he has sent her a letter calling for an investigation and it is understood Labour will too.

Last week Google agreed to pay £130 million in underpaid tax dating back to 2005.

Vestager told BBC Radio 4's Today programme: "If we find that there is something to be concerned about if someone writes to us and says, 'Well, this is maybe not as it should be,' then we will take a look."

John McDonnell, Labour's shadow chancellor, dismissed the agreement between Google and the government as a "sweetheart deal". Labour claims the internet giant was actually paying an effective rate of 3%.

Three days ago Treasury minister David Gauke denied Labour's allegation but refused to say what tax rate Google had agreed to pay the government, due to "taxpayer confidentiality".

Yesterday in parliament, David Cameron was forced to defend the arrangement after being challenged by Labour leader Jeremy Corbyn. The prime minister said the money "should have been collected under a Labour government".

Google has long been criticised for its tax structures: Margaret Hodge, a Labour MP and former chair of the public accounts committee – which will grill Her Majesty's Revenue and Customs (HMRC) and Google in February – has called them "devious, calculated and, in my view, unethical".

Peter Power / Reuters

The company's European headquarters are based in Ireland, which has a lower corporation tax rate than the UK, and it has used company structures in Bermuda, which has a corporation tax rate of zero, to shelter its profits.

These arrangements are legal. The mayor of London, Boris Johnson, has said the UK's corporate tax system is at fault for allowing internet companies to pay less tax than high street chains.

At the time the deal was struck, Matt Brittin, head of Google Europe, told the BBC: "The rules are changing internationally and the UK government is taking the lead in applying those rules so we'll be changing what we are doing here. We want to ensure that we pay the right amount of tax."

A spokesperson for HMRC described the deal as a "substantial result". The chancellor, George Osborne, was similarly upbeat.

Good to see #Google paying more tax on past profits. We want successful businesses in UK - but they should pay their taxes.

In a letter to the Financial Times, Peter Barron, Google's vice president for communications and public affairs, defended the deal:

As a US company, we pay the bulk of our corporate tax in the US: $3.3bn in the last reported year. What should Google pay in the UK? We pay tax based on the value added by the economic activity of our staff here, at the current standard rate: 20 per cent.

After a six-year audit we are paying the full amount of tax that HM Revenue & Customs agrees we should pay, including £130m in additional back tax. Governments make tax law, the tax authorities independently enforce the law, and Google complies with the law.

Alan White is a news editor for BuzzFeed News and is based in London.

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