Outrage over tax avoidance has bubbled up this week with the visit of Google’s executive chairman Eric Schmidt, who is speaking at the LSE today. The crucial agreement that has brought criticism of Google is that the sale of a product over the internet is treated just like the sale of its physical equivalent, and therefore taxed in the country where the company is domiciled. Martin Hearson argues that the system as it stands now suits countries like the US and UK, which are home to large multinationals that sell services abroad without needing a big physical presence. This is why the UK opposed the proposed changes at a meeting debating international tax rules last year.
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