Google Inc (NASDAQ:GOOG) and Amazon.com, Inc (NASDAQ:AMZN) have a lot of things not in common. Google is well-known for its search engine and the Android operating system on mobile devices; Amazon.com is known for convenient, low-priced online shopping and the Kindle. But in the United Kingdom, there are two distinct similarities that the government there sees.
They are both multinational companies, and they both “skirt” on their corporate taxes. And both are now targets of the powerful Public Affairs Committee in the U.K., which is investigating the legal practice by firms like Google Inc (NASDAQ:GOOG) and Amazon.com, Inc (NASDAQ:AMZN) – basically, finding out how the companies found the loopholes in the EU corporate tax law that allows the companies to pay so little in taxes to the U.K. despite doing billions of dollarsin business within the country.
The U.K. ministers are stumped by the idea that a company like Amazon.com, Inc (NASDAQ:AMZN) gets away with paying less than $3 million in taxes on revenue that is in the $5 billion range just in the U.K. alone. Similarly paltry taxation amounts have come out of Google Inc (NASDAQ:GOOG) in recent years, which brought one minister to call what Google as doing “evil.” How’s that for civil rhetoric? Google was claiming that its U.K. staff does not actually sell anything and is instead a group of marketers, and the main sales business works out of Ireland, which has a lower corporate tax rate. Google claims all its revenues in Europe are funneled through the Ireland office.
The same is being claimed by Amazon.com, Inc (NASDAQ:AMZN), which says its base European operations work out of Luxembourg, again a low-tax country. However, a recent report uncovered a sizable group of Amazon.com employees working in the U.K. and seeing to have sales-oriented positions within the organization, which would mean Amazon.com would have a physical presence in the U.K. and thus would be subject to taxation.
“We need to very urgently call back Amazon to question them around what (Reuters) uncovered; to look at that in relation to what they actually told us when they gave evidence to us and of course if they were economical with the truth or not totally honest in their evidence to us last time, that is a very serious thing,” said Margaret Hodge, chair of the Public Affairs Committee.
What do you think of these allegations, and what do you think of the business practices of Google Inc (NASDAQ:GOOG) and Amazon.com, Inc (NASDAQ:AMZN) in the U.K.? Let us know in the comment section below.