Friday, December 5, 2014

Google tax in the UK

It seems to be heard several times taxing Google.

George Osborn, the Chancellor of the Exchequer, declared the introduction of a new tax legislation, named diverted-profit tax. It will tax maximum 25% of the profit from activity in Britain to multinational companies. The rate is higher than usual corporate tax (21%). Therefore, Osborn expected that any companies would stop the actions for evading usual taxation.

Wall Street Journal: Britain and the ‘Google Tax’

Britain is in a wave of prosperity. The government and ruling Conservative Party look bullish. This new regulation will be enforced in April 2015. However, the exact scheme has yet to be revealed.

Some media responded to the diverted-profit tax, naming it Google Tax. Google has made no comments yet.

The Wall Street Journal: U.K.’s ‘Google Tax’ Draws Skepticism

Besides their cynical attitudes, there are several arguments regarding this scheme. Multinational companies may have some weapons against taxation. It seems difficult to define the range of diverted-profit in legal context. Furthermore, if the tax becomes a considerable burden, the companies will retreat from the UK. It results in zero-tax. There is failing examples in the past.

My past entry: Taxing news aggregator seems reckless

In my opinion, taxation scheme itself is gradually becoming powerless in accordance with the globalization. It is reckless to think that higher tax rate always makes national revenue increase. Instead, abandoning imposing tax lets huge companies remain active in the land, leading to be beneficial to the daily life of citizens. Nowadays, some companies are more contributing than the government. Yet of course, there are some tasks not to be relied on other than the government.
Every countries should reconsider the relationship between the government and companies.

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