Question

Tax avoidance by Multinational Corporations has been one of the most controversial issues in the debate about globalization. Recently the U.K. has instituted a new tax popularly referred to as the “Google Tax”. What is this tax about and how will it force MNCs to pay their fair share of taxes?

Answer 1

google tax = google tax or Facebook tax or Amazon tax in uk or spain it is a tax on income accrued to foriegn e-commerce company outside the country. Google tax is expected to impact the bottom-line giants like Google Facebook etc

Suppose any person or entity makes a payment exceeding 1 million (say) will need to withhold 6%(say) as Google tax on gross amount . However this tax is applicable only when payment is made to certain B2B company.

who will it impact

if x company is business owner and running small business or online startup Google tax will impact you

Example- mr a is running a company and is liable to pay 1000000 to foreign co for advertising purposes then suppose rate is 6% then he will withhold amount of 60000 and pay balance to foreign company and pay 60000 directly to government

It remains to be seen whether foreign company is ready to bear a loss by simply accepting low margin or will hike the advertising rate taking new tax into account.

Mr a company billing is likely to shoot up it means he has to pay 1060000 ie 1000000 plus tax