Two New Shoes Drop On Google: UK Tax Whistleblower And Canadian Antitrust Action

Within a roughly 48-hour period, Google got two big helpings of bad news. According to the Canadian newspaper Financial Post, the country’s Competition Bureau is preparing to launch a formal antitrust investigation into Google’s Canadian business operations.

The scope and precise focus of the Canadian investigation have not been revealed. Google has a nearly 90 percent search market share in Canada according to StatCounter. Bing and Yahoo combine for less than 10 percent of the market.

The other shoe comes from across the Atlantic where a former UK Google employee, Barney Jones, now has come forward to proclaim that Google engaged in an “immoral scheme” to avoid taxes and falsely claimed deals were closed in Ireland, where taxes are roughly half what they are in the UK.

Here’s a brief summary of the accusations, according to a report in the Sunday edition of The Times:

Barney Jones, 34, who worked for the internet search giant between 2002 and 2006, has lifted the lid on an elaborate structure which diverts British profits through Ireland to the Bermuda tax haven.

Although Google’s London sales staff would negotiate and sign contracts with British customers, and cash was paid into a UK bank account, deals were technically booked through its Dublin office to minimise its liabilities here.

Mr. Jones says he’s prepared to turn over in excess of 100,000 documents and emails to UK tax authorities that reportedly will back up his accusations. Google has repeatedly denied that it illegally manipulates or circumvents tax rules.

Google has been formally questioned and harshly criticized by British MPs in the past about “tax evasion” and not paying its “fair share” of taxes in the UK. An earlier article in The Independent described the arcane way in which Google funnels UK revenue through Ireland and later to Bermuda:

The company operates a scheme under which its Irish subsidiary employs Google UK as an agent, meaning the proceeds of sales made in the UK end up in Ireland. A commission of around 10 per cent is then paid back to Google UK. That fee is taxable once costs have been deducted.

Google Ireland then pays much of the money it makes to the internet giant’s Bermudan firm as a licensing fee, ensuring that a large portion of its turnover ends up in the tax haven. The process is entirely legal.

Google has repeatedly sought to counter the “tax avoidance” label and claims in part by arguing that the company contributes significantly to the UK economy through job creation.