UK Announces “Google Tax” To Stop Profits Leaving Great Britain

In an effort to stop companies like Google from diverting its profits overseas, the UK government has enacted a “Google tax” to close current loopholes in the formula — like diverting profits to Ireland — where there is a lower tax rate.
A strict 25 percent tax will be placed on all companies who make profit in the UK. It should remove any loopholes Google and other multinational companies like Apple, Amazon, Starbucks and Microsoft.
It is interesting the UK has informally named it the Google tax, considering the current relations with Google in Europe. Various European countries are not happy with Google’s dominance in the search market, asking for the company to split the business.

The Chancellor of the Exchequer George Osborne announced the plans today, which will come into the government on April 2015. The language in the new law could still create new workarounds and we are sure companies are actively looking for ways to work around the heavy 25 percent tax — larger than the current 21 corporate tax in the UK.
If anything, it does show a shift away from diverting profits to countries like Luxembourg and Ireland. The UK is one of the largest markets in the World, especially for consumer goods and companies should pay higher tax to work in the region.
Other countries like Germany, France and Spain are facing the same sort of tax avoidance, but not as active as the UK. Ireland, part of Great Britain but not part of the UK government, is a smart divert for companies that has been a workaround for the past three decades.
Multinational companies dominant sales in the UK, mostly coming from the U.S. The tax avoidance could potentially lose the UK billions in tax, which could be used to fund the NHS and other public services. Considering the lackluster position the UK government is already in, due to the recession, it would be nice to see all of the money arrive in the UK’s coffers.