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Clients question Google's UK tax status: poll

A Google search page is seen through the spectacles of a computer user in Leicester, central England July 20, 2007. REUTERS/Darren Staples
A Google search page is seen through the spectacles of a computer user in Leicester, central England July 20, 2007. REUTERS/Darren Staples

By Tom Bergin

LONDON (Reuters) - Some of Google's clients have questioned its assertion that it does not sell to customers from its London office, a key plank in its ability to operate almost tax-free in Britain, a poll said on Friday.

Meanwhile, the company began amending advertisements for London-based jobs on its website, which previously said that candidates would have to achieve "sales quotas" and "drive revenues".

Google Inc says it sells all advertising in the UK, France and Germany from its Dublin office.

The Drum, a magazine for marketing professionals, asked 80 ad buyers and digital agencies - companies that purchase advertising products on behalf of clients - about their dealings with Google's London office and their interaction with the office in Dublin.

Of the 29 that replied to the survey, "Almost 80 percent of respondents said they dealt with London when buying Google advertising. Around 14 percent said they used Dublin, the remainder said they did not know," an article posted on The Drum's website said.

(http://www.thedrum.com/news/2013/05/03/google-tax-row-80-media-buyers-say-they-deal-london-when-buying-advertising-google)

Google declined to comment on Friday on the details of the survey.

Corporate tax avoidance has become a hot political issue in Britain amid austerity measures to pay for the banking crisis.

British Prime Minister David Cameron has said he is working to address the problem and plans to put it on the agenda for the G8 meeting of the world's largest economies to be held in Northern Ireland in June.

From 2006 to 2011, Google generated $18 billion in revenues from Britain, according to statutory filings, and Google UK paid just $16 million in taxes, its accounts show.

"When asked what they considered they were doing when dealing with Google's London team, 76 percent said they considered they were buying from them. 17 percent said they were receiving general advice in order to buy through Dublin," the Drum report added.

When asked what they considered to be the primary role of Google's London advertising team, 80 percent said "sales", while 17 percent said "support", the report said.

CHANGING THE ADVERTS

Earlier this week British lawmakers said they planned to call Google back to testify to a parliamentary committee after Reuters revealed the company advertised for UK staff to "negotiate" and "close" deals. A Google executive told the committee in November that UK staff did not sell to clients.

Google said: "We accept that the wording of some job adverts may have been confusing and we are working to make it clearer."

On Friday, Google had begun amending UK-based job advertisements on its website, which referred to sales activities.

A reference to "Acquire new strategic medium-sized clients" was removed from an advertisement for an "acquisition manager (UK/Ireland)". Prospective candidates are now told they need to "Approach prospects with tailored presentations and industry data".

All adverts for jobs based in Paris and Germany, which last month carried sales-related role descriptions, were amended by Friday afternoon.

Reuters also found that profiles of around 150 London-based employees on the LinkedIn networking website said they were involved in formulating sales strategy, managing sales teams, closing deals or other sales work.

Google has denied misleading lawmakers and said it complied with UK tax law. Google says it employs around 1,000 London-based "digital consultants" who educate customers about the benefit of Google products.

It said these people did "encourage" clients to buy but said all selling was done by "a couple of hundred" staff in Dublin.

The company declined to say specifically how the process of selling was divided between Dublin and London or whether this involved London staff negotiating contracts, which were then rubber-stamped by Dublin.

Under international tax law, companies are allowed to engage in promotional work in a country without creating a tax residence, but lawyers and academics said negotiating on British soil could mean Google's UK revenues became assessable for income UK tax purposes.

Currently, Google UK receives fees from Google Ireland that are intended to cover Google UK's costs, plus a small premium.

(Editing by David Cowell and Jane Baird)

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