Ex-Googler blows whistle on dodgy tax deals

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Ex-Googler blows whistle on dodgy tax deals

Internet companies face further investigation.

Google is deeper in hot water in the UK after a former staffer spoke out about the internet giant's tax avoidance practices.

Former Google employee Barney Jones told the media and the House of Commons committee investigating the web giant for tax avoidance, that contrary to earlier statements, advertising deals were concluded in Britain and therefore fell under that country's jurisdiction.

Speaking to the Sunday Times, Jones showed the paper evidence that  London sales staff would negotiate and sign contracts with British customers with money being paid into UK bank accounts.

The deals where then technically booked through Google's Dublin office through which profts were channelled to Bermuda so as to minimise UK tax liabilities.

Jones' testimony to the House of Commons public accounts committee along with a pile of 100,000 emails and documents will place further political pressure on Google, which denies any wrongdoing and says it has fully complied with UK tax law.

Between 2006 and 2011, Google paid what amounts to less than a tenth of a per cent in corporation tax out of GBP11.9 billion in revenues, according to accounts filed in the United States.

UK prime minister David Cameron is set to meet Google chief executive Eric Schmidt later today, but the company's tax affairs won't be discussed, Reuters reported.

Amazon is also under fire in Britain for paying minuscule amounts tax there on large revenues earned from sales in the country - US$9 millon on earnings of US$23 billion over the past six years - by basing itself in Luxembourg.

Reuters has uncovered evidence however that the UK operation has a large degree of autonomy with its executives making decisions there and not in Luxembourg. Amazon fulfills orders from within the country and has staff there, and for that reason should be considered a UK retailer and subject to tax laws in that jurisdiction.

In Australia, Google and other large multinational corporations are also being criticised for the small amounts of tax paid on big sales revenues. The government said in February this year that it intended to look into the matter and clamp down on transfer pricing, the accounting technicality used to shunt profits from the country they're made in, to tax havens around the world.

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