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Government’s new ‘Google Tax’ likely to cause row

The new so-called ‘Google Tax’ announced by the Government, specifically to counteract multinationals, is likely to cause a massive row.

Tax avoidance experts say that there’s a ‘legal quagmire’ in the offing thanks to Chancellor George Osborne and his decision to move forward on a crackdown ahead of international standards from the EU are put into place. Not only that, but contractor accountants and tax lawyers say that the test to determine profits that have been ‘artifically diverted’ isn’t clear enough.

Now, for what it’s worth, the new rules are borne out of necessity; multinationals like Google use the so-called ‘double Irish’ system to move their massive millions – or even billions – out of the country so as to avoid paying anything in corporation tax here in the UK. Firms like Starbucks say they have no intention of paying any corporation tax in the next three years, if you can believe it.

Meanwhile, the new proposal, that goes into effect on 1 April 2015, firms will have to disclose to tax officials if they’re in danger of falling afoul of the 25 per cent diverted profits tax. Companies that sell goods or services to Brits but lack a permanent British establishment, or companies with a permanent British arm but avoid paying corporation tax by transferring money to other company branches outside UK fall under the new tax.

You don’t need an advanced degree in economics to know that there’s going to be a massive backlash against the new tax law when all these multinationals see how their profit margins are in question. These firms have some big, powerful, and very well-paid legal experts that are sure to turn the screws when it comes to finding ways to weasel out of this, so it’s only a matter of time before this new tax law gets more holes poked in it that nice slice of Swiss cheese.

Still, it’s a valiant effort by the Government to try to do something about this whole tax avoidance business. For what it’s worth, I’m tired of watching these multinationals cry poverty when they’re busy shoveling their profits down the gullet of an offshore account or into a foreign arm of the same company. I mean how stupid do these people think we are anyway?

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