Newspaper article The Journal (Newcastle, England)

EU May Investigate UK Tax Deal with Google

Newspaper article The Journal (Newcastle, England)

EU May Investigate UK Tax Deal with Google

Article excerpt

Byline: David Hughes and Joe Churcher Reporters

GOOGLE'S tax deal with the UK authorities could be investigated by Brussels as George Osborne maintained the agreement was a "major success".

The Chancellor said he understood "frustration and anger" over multinationals avoiding big bills but blamed international laws and said he always sought "the best deal for Britain".

The PS130 million 10-year deal with HM Revenue and Customs on back taxes was hailed as a "victory" by Mr Osborne when it was announced at the weekend but immediately came under fire.

European Union competition commissioner Margrethe Vestager indicated she is ready to look into complaints that the settlement breached EU rules - as the Scottish National Party and Labour both asked her to launch an investigation.

The developments came as the European Commission announced a new drive to align tax laws in all 28 member states, to help in the fight against aggressive avoidance by large companies.

Asked if he stood by his initial upbeat assessment of the deal, Mr Osborne told Sky News: "My only interest, as the country's Chancellor of the Exchequer, is to get the best deal for Britain - to bring the jobs here, the businesses here and to make sure that taxes are paid here.

"When I became Chancellor, Google paid no tax. Now Google is paying tax and I have introduced a new thing called a diverted profits tax to make sure they pay tax in the future. I regard that as a major success. Is there more to do? Clearly there is. We've got to make sure the international rules catch up and we are leading that effort. But ultimately the solution to all of this is to make sure we have got more British companies out there that are great successes in areas like tech."

In his letter to Ms Vestager calling for a probe, shadow chancellor John McDonnell suggested the deal could have broken state aid rules by offering Google "favourable treatment".

He said: "Public concern has focused on both the low sum offered by Google in lieu of taxes dating back over a decade, on the potential future damage to UK tax revenues, and on the revenues of our EU partners. …

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