Amazon And Google Both Under Fire In British Parliament For Tax Affairs (Updated)

Rumors of fiscal irresponsibility swirl around two Internet giants.

Google has come under fire from Britain's lawmakers over its tax bills in the U.K. Google's head of sales in Northern Europe, Matt Brittin, was challenged by MP Margaret Hodge, over the search firm's method of reporting its income for tax purposes.

Mrs. Hodge, the chair of the Public Accounts Committee, claimed whistleblowers told her that Google had sold advertising within the U.K. and invoiced customers in the U.K. This countered the firm's claims that customers in the U.K. paid Google in Ireland, with Mr. Brittin claiming that "no money changes hands" on the U.K. mainland.

Mr. Brittin, who admitted that Google's larger clients, which brought in between 60% and 70% of the firm's advertising revenues, dealt with Google's U.K. staff, defended Google robustly. "Tax is a matter of following the laws that are there, internationally, and that's what we do," he told the committee, but Mrs. Hodge was not having it. "You say you're a company that does no evil," she told Brittin. "Well, I think you do do evil."

With Google's U.K. sales worth £3.2 billion ($4.86 billion), the firm's tax liabilities come in way below that. In 2011, it only paid £6 million in corporation tax.

Meanwhile, Reuters claims Amazon paid $3.8 million in tax on its 2012 income in the U.K., despite making $6.5 billion from group U.K. sales. Amazon also received government grants totaling £2.5 million ($3.8 million), $150,000 more than its tax bill. One MP called Amazon's fiscal contribution "pathetic."

This is not the first time that the British Parliament has drawn attention to discrepancies in income versus tax paid by large U.S. firms. Facebook, Apple, Starbucks, Apple, and Amazon have all been targeted by MPs in an attempt to shame them into fiscal responsibility. Starbucks later made a voluntary payment of £20 million to Her Majesty's Revenue and Customs, although the firm's tax adviser said that he was "mystified" by the decision, saying that the firm made no profits in the U.K.

There is increasing concern in Europe over U.S. technology firms' reluctance to make their tax contributions more commensurate with their earnings in the old continent. Earlier this week it was announced that French legislators were mulling imposing a tablet tax on firms such as Amazon, Apple, and Google in order to fund home-grown culture, just months after proposals to tax the likes of Google and Facebook for data mining French citoyens.

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