Don't be evil - Google pays £6m UK tax on £395m turnover

computerworlduk.com

5 points·EdwardQ··6 comments

Last time I checked corporation tax was payable on profits, not turnover.

http://www.hmrc.gov.uk/ct/getting-started/intro.htm

Profit is whatever your accountant wants it to be. Revenue is much more objective.

Profits for the books are somewhat malleable by an accountant. There are still limitations to what you can do. For tax, rules are tighter. Even revenue is often not objective. For example, I sell someone a subscription to a service for a year. Do I record the revenue now (not a good idea), spread it out over 12 months (practical) or every time a user uses the service (not so practical, more realistic?).

Corporate tax is on profit. VAT like taxes are closer to revenue (or more accurately, closer to when you get paid by customers).

I'm a British taxpayer, but let's put this into perspective: turnover of £395 million ... The search giant reported overall losses of £24.1 million in the UK

If my business made a loss, it wouldn't pay much tax either (beyond the VAT I have to collect, employer NICs, not to mention the income tax my employees pay, etc.)

If there's anything fishy here, it's why Google is making a loss on such healthy revenues in the UK when it's so profitable in the US.. but the tax itself is not surprising given the lack of profit.

It would help if we knew what UK Google's real profit was (as opposed to the accounting profit (loss) it (doesn't) pay tax on).

e.g. I expect UK Google pays a lot to license various Google trademarks from an offshore Google subsidiary. How much?

In my country companies pay no income tax if there is no profit (they do pay other taxes for each employee). I think this is pretty common in Europe, as taxes are usually taken from profit no revenue.

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