Alphabet Inc (NASDAQ:GOOG) To Appear Before British Parliamentary Committee Over Controversial $186 Million Tax Settlement
Alphabet Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) won’t rest easy even after settling a legacy tax issue with the British revenue authority. A U.K. parliamentary committee is preparing to summon the company to come and explain what transpired in its deal with Her Majesty’s Revenue and Customs (HMRC). It seems to U.K. opposition politicians that the HMRC entered into sort of a sweetheart deal with Alphabet.
Alphabet Inc (NASDAQ:GOOG) agreed to pay 130 million pounds ($186 million) to HMRC in back taxes. The $186 million settlement covers tax claims dating back up to 10 years ago. HMRC termed the settlement with Alphabet a victory as the authority has in the recent times been trying to seal tax loopholes. However, the settlement doesn’t mean that Alphabet was found to have violated Britain’s tax laws.
Nevertheless, the U.K. opposition politicians are reading mischief in Alphabet’s $186 million back tax settlement with the HMRC. It appears to the opposition that Alphabet is being made to pay way less than what it should in the tax avoidance settlement. As such, the British parliament’s Public Accounts Committee (PAC) is planning to grill Alphabet on the matter. The Labour Party’s Meg Hillier revealed in a tweet the plans to call Alphabet to shed light in the now controversial back tax deal with HMRC.
Tax avoidance schemes
To come to the settlement, HMRC had been investigating Alphabet Inc (NASDAQ:GOOG)’s tax avoidance practices for years. However, Alphabet is not the only multinational facing tax avoidance issues in Europe. Apple Inc. (NASDAQ:AAPL) is another one. Many multinationals operating in Europe have developed sophisticated maneuvers to enable them pay less taxes than they would pay under normal circumstances. The maneuvers are not necessarily illegal because what the companies do is that they exploit tax loopholes. However, European countries hit by tax losses are tightening their tax regulations, especially sealing loopholes exploited by the likes of Alphabet and Apple.
New tax era for Alphabet
As part of the settlement with HMRC, Alphabet Inc (NASDAQ:GOOG) will in the future be more transparent in its tax calculations in Britain.