Google believes its Irish-billed Turkish operation should pay no local taxes - but the government disagrees.
Google has found itself in hot water with the Turkish government, which claims the company owes £28.75M in taxes.
According to an article over on TechCrunch
- which quotes local news sources
- the Turkish government has completed a one-year investigation into the search giant, and believes that Google owes a substantial amount of additional taxes.
The investigation has found that while Google's European headquarters are in Ireland, the fact that the company has offices in Turkey and runs its profitable advertising services in this country means that it is liable for national taxes on all revenue generated via its Turkish registered arm - resulting in an impressive bill for back taxes of 71M Turkish Lira.
Google, for its part, is disputing the Turkish government's conclusions. It claims that because its European advertising operation is run entirely from its Ireland headquarters, Google owes the Turkish government nothing - whether or not it has offices or subsidiaries in the country, and regardless of any income it might make from providing advertising services in Turkey.
The Turkish government's claims of tax responsibility are given weight by the fact that Google has a fully-owned subsidiary registered as a limited Turkish company called Google Reklamcılık ve Pazarlama Ltd. Şti. (Google Advertising and Marketing Limited). This gives the Turkish government something local to target, casting a shadow on the company's claims that it runs its Turkish advertising empire entirely from its Ireland offices.
If Google does not pay the £28.75M, it could find itself in court, and even banned from operating its services in Turkey for the duration of the hearing.
Do you believe that Google has been caught in a tax dodge, or is the Turkish government just targeting the company with the biggest pockets in an attempt to generate a bit more income? Share your thoughts over in the forums