Monthly Archives: June 2013

Britain, G8, Google, Government, Politics

Google’s tax ploys criticised by MPs…

GOOGLE has been accused of ‘relying on deeply unconvincing arguments’ to avoid paying millions of pounds in British taxes.

The online search engine was described as ‘brazen’ for denying ‘clear evidence’ that it made millions from selling advertising in the UK, a powerful body of MPs found.

Last year, Google paid just £7.3 million in corporation tax on sales of £3 billion. Tax analysts say the figure should have been at least £200 million higher.

The shortfall deprives Her Majesty’s Revenue and Customs (HMRC) of money to fund public services, leaving ordinary taxpayers in Britain to make up the difference.

Matt Brittin, former Managing Director of Google in the UK and current Vice President of the company, last year told MPs all of its sales were made from its European HQ in Dublin, and its British subsidiary was merely a ‘service company’. This allows it to pay tax in Ireland, which has a corporation tax rate of just 12.5 per cent compared with Britain’s 23 per cent.

But Google was hauled back in front of MPs last month after fresh evidence emerged UK staff were involved in selling.

In its report published this week, the Public Accounts Committee found Google’s arrangements were ‘manifestly artificial’ and ‘have no purpose other than tax to enable it to avoid UK corporation tax’.

Margaret Hodge MP, who chairs the committee, said:

… Google brazenly argued before this committee that its tax arrangements in the UK are defensible and lawful… This argument is deeply unconvincing and has been undermined by information from whistleblowers, including ex-employees of Google, who told us that UK-based staff are engaged in selling.

She previously said that, contrary to its corporate motto, Google ‘does do evil’ by avoiding taxes in the UK.

Her comments come ahead of the G8 meeting next week hosted by Britain, where global leaders will come under pressure to crack down on tax havens and tax dodging by multinational corporations.

Google openly admits using Bermuda to lower its global tax bill, and last year funnelled more than £6 billion into the offshore haven.

There were ‘clear discrepancies with the claims made to us by Mr Brittin in November 2012’, the report said. It found 70 per cent of Google’s sales involve UK staff as well as Irish workers, and its UK workers are largely paid by commission and have monthly sales targets.

Evidence also emerged of Google invoices sent out bearing British addresses, and Mr Brittin admitted ‘a lot of the aspects of selling’ did take place in the UK.

Mrs Hodge also criticised HMRC, saying:

… It is extraordinary that the department did not challenge Google over the complete mismatch between the company’s supposed structure and the substance of its activities. We could not understand how a few journalists, whistleblowers and MPs have uncovered what the department could not.

Google has said that it complies with all the tax rules in the UK, and it is politicians who make those rules. It added:

… It’s clear from this report the Public Accounts Committee wants to see international companies paying more tax where their customers are located, but that’s not how the rules operate today. We welcome the call to make the current system simpler and more transparent.

David Cameron, the British Prime Minister, said he would use the G8 summit to try to broker a deal on tax avoidance. Mr Cameron said that in a globalised world, no one country can on their own effectively stamp out either tax evasion or aggressive tax avoidance and this is exactly the sort of issue the leaders of the eight major economies should be addressing.

Conservative MP Stewart Jackson, who sits on the committee, said:

… The Government must look again at multilateral and bilateral tax protocols via the chairmanship of the G8, strengthen capacity at HMRC and look at simplified tax legislation as a matter of urgency.

Mr Jackson’s colleague, Steve Barclay MP, said there’s clear evidence Google is conducting sales operations and making astronomical profits in the UK – to suggest otherwise is plain fantasy.

A statement from the Treasury has said that the Government remains committed to creating the most competitive corporate tax system in the G20, but says this goes hand in hand with our call for strong international standards to make sure global companies, like everyone else, pay the taxes they owe.

HMRC says that, since 2010, it has collected over £23 billion in extra tax through challenging large businesses’ tax arrangements. It insists it will relentlessly pursue businesses that don’t play by the rules.

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Government, Politics, Turkey

Turkey protests, little sign of compromise…

Turkey’s Prime Minister, Recep Tayyip Erdogan, should listen to the vibes all around him. Mr Erdogan is not Hosni Mubarak, the former deposed and ousted Egyptian leader, and Turkey is not Egypt, a country that went through root and branch upheaval during the revolt of the Arab Spring. Whilst disturbances in Turkey will not amount to a ‘Turkish Spring’, Mr Erdogan should listen to those who elected him: by reigning in his hubris and his divisive politics.

Erdogan still has a choice between rising to the heights of statesmanship of former French President Charles de Gaulle or by spending his remaining political life as a Turkish likeness of Russian President Vladimir Putin.

The questions being asked of Mr Erdogan is whether he has the political determination to accept the demands of the initial protestors, which started in the occupied Gezi Park. Those frustrations are being asked, too, in Turkey’s capital Ankara, on Istanbul’s Taksim Square.

For Mr Erdogan to concede to those demands would mean giving up on his personal dream to build the Ottoman barracks on the park and turn it into a shopping mall. But his track record would suggest this is highly unlikely.

Arguably, the single most important trigger for the rapid spread of events was the prime minister’s inability and unwillingness to listen to reasoned critique and disagreement. This inability has manifested itself over the last few years.

Erdogan’s rhetoric has been spiralling out of control and has ranged from lecturing women on how many children to bear to calling everyone who enjoys drinking a beer in a sidewalk café an alcoholic.

What is more, the country has used an excessively violent policing strategy, with which the government has oppressed almost all legitimate protest by trade unions, political movements and student groups.

Such extreme use of force looks awkward in a country where the government was re-elected with almost 50% of the vote just two years ago and where, remarkably, its macroeconomic development indicators tell a story of unfettered progress.

Mr Erdogan’s government still enjoys such popular support, but one should wonder why it is unable to tolerate a few protests here and there and why it appears incapable of giving into what are very reasonable demands against the excesses of environmental degradation and rent-based urban renewal policies.

And why would an elected prime minister, who has, until now, been respected abroad and at home, use the force of his security apparatus to crush so brutally any popular dissent? Such protests are far from threatening Mr Erdogan’s place at the top of Turkey’s political system.

Part of the answer lies in Turkey’s recent record of undemocratic manipulations to bring the government down. Kemalist elites, the military, the judiciary and the so-called ‘deep state’ rogue elements acting within the visible state structures, conspired to terminate the Justice and Development Party’s (AKP)  government from the very moment of its first election in 2002.

Ever since, the AKP has faced several attempts at power grab – from an ultra-nationalist conspiracy in the mid- 2000s (based on unresolved assassinations of Christian missionaries) to the so-called Republican Marches against the election as President of Abdullah Gul to the Constitutional Court’s only narrowly averted closure case against the ruling party in 2008.

These experiences have led the AKP government to look at Turkish politics through the prism of conspiracy theories, and the blame for this paradigm shift does not lie just with the AKP.

More significantly, however, is the manipulations the Erdogan government has faced from the judiciary and the military. This led to the AKP government filling both institutions with sympathisers, adding to an already weak system of checks and balances in Turkey.

The confluence of both the conspiratorial mind-set and a lack of checks and balances has created the ground for Erdogan’s unhealthy mix of extreme self-confidence on the one side and his insecurity vis-à-vis public criticism on the other.

The shopping mall in Gezi Park, the third bridge over the Bosporus, the new airport and a canal project that is supposed to connect the Marmara and the Black Sea have been devised and planned without any public debate or consultation.

That the prime minister sees any criticism of these projects as manipulations by domestic and external enemies is a sure sign of his insecurity. That he failed to grasp that the Taksim protests were not started by undercover military agents, Kemalists, Iranian agents or Syrian provocateurs may yet mark the beginning of his undoing.

What is needed is for Mr Erdogan to be able to arrive at a sober consideration of the situation by giving-in to the demands of the protestors in Gezi Park, by calling an impartial review of recent police brutality, and by giving some thought to his heavy policing strategies, all of which have turned Turkey into a police state.

If he did that, Mr Erdogan would still have a chance to enter Turkish history as a statesman who carried his country into the 21st century, disassembled the military’s tutelage, ended the Kurdish War and granted long-fought-for rights to the country’s largest minority, the Kurds.

If he fails, and drags the country towards polarisation and political unrest, his government, the economy, and the people of Turkey will lose.

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Britain, Syria, United Nations, United States

The Syrian tinderbox as the West considers sending arms to the rebels…

PRESIDENT Barack Obama is considering arming Syrian rebels in a bid to end a civil war that is now into its third year.

There are growing concerns that President Bashar al-Assad may be gaining the upper hand in the conflict that has claimed at least 80,000 lives and displaced millions more, as government forces recently captured the strategic key town of Qusair.

Mr Assad’s forces are said to be preparing for an assault on the city of Aleppo.

A decision to approve military aid for Syria’s opposition forces could come within the next few days. US Secretary of State, John Kerry, postponed a Middle East trip to attend a Syrian summit in Washington instead.

Opposition leaders in Syria have warned the White House their rebellion could soon face devastating losses without greater support from the United States.

Syria’s precarious position in the heart of the Middle East makes the conflict extremely unpredictable.

The major stumbling block of supplying arms to rebels remains the fear that Al-Qaeda linked and other extremists fighting alongside anti-Assad militias could end up with the weapons.

Washington is still examining evidence that Assad’s forces may have used chemical weapons against the rebels – something Mr Obama has warned Assad would cross a ‘red line’ in provoking swift US military intervention.

Britain and France claim they already have substantive evidence that Assad’s forces have used low levels of the deadly nerve gas sarin in several attacks on rebels, which they have presented to the UN.

OPINION

The threat to world peace and prosperity posed by the bloody civil war in Syria is impossible to exaggerate. The shock-waves from the conflict between rival Islamic factions are spreading far beyond the country itself. The entire region is on the brink of being destabilised.

In Iraq, for example, supposedly rescued from tyranny by Allied forces in the war that ‘ended’ with American troops being withdrawn in December 2011, some 2,000 violent deaths have been recorded in the past two months alone.

In Turkey, Lebanon and Jordon, tensions are rising as hundreds of thousands of displaced refugees pour across the borders in pursuit of safe haven and refuge. Many thousands are in need of food and medical attention. The International Committee for the Red Cross (ICRC) has largely been prevented from attending the sick and dying as Assad has launched wave after wave of attacks on civilians on routes that should have been safeguarded as humanitarian corridors.

On the Golan Heights between Syria and Israel, after a 40-year ceasefire monitored by the United Nations, Austrian peacekeepers are pulling out as the area braces itself in becoming a war zone again.

In Syria, President Assad, far from being defeated, is being supported with Russian arms along with Hezbollah, the fanatically anti-Israeli terrorist group based in Lebanon.

Yet, this is the powder-keg into which President Obama is said to be on the verge of igniting a bigger flame. A decision is imminent on whether to send American arms to the beleaguered opposition forces.

Leaving aside the danger that Iran will retaliate by targeting Israel or US/UK interests in the region, the fact remains that the Syrian rebels (just like their counterparts in Libya two years ago), are riddled with factions hostile to the West – including Al-Qaeda.

Mr Obama, and the British Foreign Secretary, William Hague, speak glibly of arming only ‘vetted, moderate rebel units’. The inherent risks of doing so should not be played down with an awareness that these weapons could end up in the hands of the perpetrators of 9/11.

No one can know the way to peace in Syria, the tense geopolitical situation in the region is a cocktail of extremism and hatred. If the United States and Britain have learned anything from the West’s recent past interventions in the Middle East, they must surely realise that ramping up the violence in Syria comes with grave dangers.

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