Google goes on offense on UK tax issue

LONDON: Google has successfully turned the corner on its UK tax issue after being stung by criticism, industry experts agree.

LONDON: Google has successfully turned the corner on its UK tax issue after being stung by criticism, industry experts agree.

Following scrutiny over its tax dealings in Parliament last week, the search engine giant responded with a call for the UK government to lead on tax reform.

In a column in The Observer, Google chairman Eric Schmidt said Chancellor of the Exchequer George Osborne had the “perfect opportunity to take the lead” on the issue at next month's G8 meeting.

MHP media director Ian Kirby called the move a classic example of being proactive.

“It has learned from previous situations like this that you can't sit there, take negative press, and give half-answers or a generic statement,” he said. “In responding to allegations, it has come up with something new to say, and that's the right thing to do.”

Schmidt also defended Google's tax practice. He pointed to investment that he claimed would generate £80 million, about $121 million, in employment taxes and £50 million, or $76 million, in taxes on documents, known in the UK as “stamp duty.”

It follows the company being forced to deny that it is disguising how it operates to minimize its tax bill.

Appearing in front of the UK House of Commons Public Accounts Committee on Thursday, Google VP Matt Brittin stood by evidence he gave last year that the firm's advertising in Europe was sold through its Irish offices.

Drew Benvie, founder and MD of UK-based comms agency Battenhall, said Google had been a victim of its own PR and tagline “do no evil,” a phrase that Public Accounts Committee chair Margaret Hodge claimed the company had not lived up to.

However, Benvie backed the decision to place an op-ed in The Observer, a title he said was well respected in the tech community.

“It was the right move, and it had to be him, otherwise it would have seemed that the issue was not being taken seriously. He cannot avoid this issue and had to take it head-on,” he said. “Putting his perspective at the beginning of the week was critical and is something he can refer to throughout the week when he is questioned.”

But Benvie warned that Google now had to be imaginative in showing it was working with the UK government on the issue.

“If it is suggesting things need changing, it needs to back up its words and do it publicly,” he added.

This story originally appeared on the website of PRWeek UK, the sister publication of PRWeek at Haymarket Media.

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