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Alphabet Inc (GOOGL) Says UK’s ‘Google Tax’ Doesn’t Apply To Them

Alphabet Inc (GOOG) Google

Alphabet Inc ’s top tax executive told UK authorities that the new UK tax – popularly called “Google Tax” – will not apply to the Internet firm, says a report from Bloomberg. The tax – the Diverted Profits Tax – came up last year owing to rising concerns that Alphabet and other tech firms are using loopholes to transfer profits to offshore tax havens.

Alphabet Inc (GOOG) Google

“Google Tax” does not apply to us

So, to discourage transfer to offshore tax havens, the UK officials introduced this so-called “Google tax,” which allows the govt. to charge 25% tax on any profits it believes have been moved out of the US improperly. Standard corporate tax rate in the UK is 20%.

However, Alphabet’s VP for finance – Tom Hutchinson – speaking to a Parliamentary committee, which is investigating Google’s 130m-pound ($188 million) settlement with the U.K. tax authority, said the new tax does not apply to the firms past profits.

“Because of our agreement with the HMRC we are paying the right amount of tax, so we are not having to pay anything else,” the executive said.

Alphabet Inc has been using tactics like the “Double Irish” and “Dutch Sandwich,” to shift its profits to a Bermuda subsidiary, Bloomberg reported in 2010. But, in Thursday’s hearings, the executive said such strategies has no effect on the tax the firm paid in the UK. Transferring of profits to Bermuda has been designed to lower the taxes in the US, the executive said.

“Under the rules in the U.S., this structure makes sense,” he said. “I don’t think this is an aggressive structure.” Hutchinson said his duty is to efficiently manage the tax affairs of his firm, and Alphabet paid 19% as tax around the world, “a fair amount of tax to pay.”

Alphabet executive does not know his salary

Alphabet Inc executives have been accused of being unknown to reality after one of firms most-senior UK executive failed to tell MPs his salary. On Thursday, Matt Brittin appeared before the public accounts committee to be questioned over the £130m in back taxes that the firm agreed to pay last month.

Brittin said that the firm paid 20% tax in the UK, and not the 3% that has been reported in the media. However, he was not able to tell on what number the firm paid 20% tax. Then Meg Hillier – committee chair – asked the salary figures to know the divide between the senior executives and ordinary citizens.

But, to their surprise, Brittin said he did not know his exact salary. “You don’t know what you get paid, Mr Brittin?” she said laughing.

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Aman is MBA (Finance) with an experience on both marketing and Finance side. He has work as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, playing PC games and cricket.