The coalition government’s ‘Google Tax’, aimed at cracking down on multinationals shifting profits overseas, has been criticized as a “total failure”. New documents show it is predicted to raise no money over the next six years. Officials had predicted that the tax would raise up to £400mn a year, but new figures published with the budget last week show revenues slumping to zero.
Shadow financial secretary to the Treasury, Labour Party’s James Murray said, “Rishi Sunak tried to bury it but the diverted profit tax is a total failure. The government’s own documents admit it will bring in absolutely nothing. Big multinationals are benefiting time and again from the chancellor’s tax breaks, while British businesses are stifled with debt and unfair business rates.”
The tax was originally introduced by the then chancellor, George Osborne, to stop large-scale tax avoidance. Osborne said the tax was “designed to deal with the very real anger that people feel when they see large businesses not paying tax.” It was called a “world-leading” anti-avoidance measure. However, it later emerged that Google would not be paying the tax, after negotiations with HM Revenue and Customs (HMRC), but other companies were forced to.
The measure was brought in after a series of tax rows involving major corporations. Google has used tax structures known as the “Double Irish” and the “Dutch Sandwich” to channel profits through Ireland and tax havens to avoid tax. It said last year it would no longer exploit the loopholes.
