Governments 'one step behind' tech firms in tracking tax – Meg Hillier

Google's global servers make untangling tax arrangements hard

Companies like Google are harder to hold to account than average tax-avoiding businesses because local governments are technologically "always one step behind", chair of the Public Accounts Committee Meg Hillier said at the Global Tax Summit today.

Hillier was speaking at the first global summit for Parliamentarians intended to address the issue of tax avoidance across jurisdictions.

The summit is working on a concordat intended to outline how Parliamentarians will hold the government to account.

Internet companies have regularly had their tax arrangements scrutinised by the Public Accounts Committee, the body Hillier currently chairs.

Earlier this year Google's £130m settlement with HMRC – for 10 years of back taxes – came under fire by the PAC.

The committee concluded it was not possible to judge whether the £130m back-taxes deal - for monies owed since 2005 and which took six years to agree - was a fair deal for taxpayers.

Asked by The Register if "newer" technology companies had been unfairly put in the spotlight for tax arrangements that other, older companies had been using for decades, Hillier said she did not believe they did.

She said when the committee looked closely at Google, its algorithms (we’re going to assume she meant tax calculation algorithms, but we’ve asked her to clarify) and transactions were recorded on servers that "can be anywhere in the world" which "made it a challenge" for HMRC to keep up.

"I recognise that is a technical challenge and as tax authorities we are always going to be one step behind."

The Organisation for Economic Co-operation and Development (OECD), the intergovernmental economic organisation, is pushing for country-by-country reporting system that clearly shows the sales and profits in each area.

However, campaigners have warned that will not provide the “much needed” transparency over tax affairs as the information will be supplied to HMRC on a confidential basis.

Hillier said: "Sunlight is the best disinfectant. Companies that operate globally ought to be accountable globally."

She added: "It is clear that we need to work together, as parliamentarians push our government to act."

Pascal Saint-Amans, director at the OECD, said progress on transparency has been made over the last decade - pointing to the fact that countries will soon be able to exchange their information on request.

"What we have put in place is a mechanism to monitor the implementation."

But Fabio Masi, member of the European Parliament for Germany, said not enough has been done so far to avoid further scandals. He cited the Panama Papers scandal as an example of forcing the issue into the spotlight. "I belive publicity is the only way forward," he said.

Mari noted he paid 600 times more tax than Apple in Belgium last year.

He backed proposals that if a country has a turnover of more than £750m, it ought to provide details of its tax arrangements to the public.

Former PAC chair Margaret Hodge pushed the issue of tax avoidance during her tenure.

Hodge previously told The Register that as long as the tax affairs of global, multinational companies are confidential, the government will never know whether they have made a sweetheart deal with HMRC. ®

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