VENTURES AFRICA – A division of Naspers, Africa's largest media company, has criticised tech giant, Google, accusing the US Company of not paying as much tax as it should in South Africa, thus putting local digital publishers at a disadvantaged position.
24.com's CEO Geoff Cohen decried tax-planning strategies of global businesses, citing Google's use of offshore entities for its transactions, which means it is paying far less than it should be paying in South Africa.
"It is clearly wrong that as we invest in building a tax-paying business employing hundreds of South Africans, we are competitively disadvantaged through aggressive tax planning strategies of global businesses," said Mr Cohen.
Quoting some estimates, 24.com says Google makes over R1 billion ($90.9 million) from online ads alone, lamenting that it makes the potential losses for South African companies and the government who should be getting massive tax revenues.
"Based on these figures, lost tax revenue from Google is estimated at R140m/annum ($12.7m) in corporate taxes, and possibly a further R100m ($9m) in PAYE," the company said in a statement.
24.com, Naspers online division said further that although Google's dominance in South Africa was undisputed, adding that, "In the digital age, we accept that we compete with businesses from all over the world," but local businesses would have benefited if the playing fields were levelled, and everyone paid the taxes they were supposed to pay.
In a rebuttal, Google told South Africa's TechCentral that it "complies with tax laws in South Africa and every country where we operate".
Google also claimed it was not only making money in South Africa, but also had a mutually beneficial relationship with publishers, helping them pull traffic to their websites through its search engine and Google news.
“Through these relationships, we’re able to send users to news sites over 10 billion times a month from Google News and Search — each click represents a business opportunity. In 2013 we shared more than $9 billion with our AdSense partners,” a Google spokesperson said.
Google prides itself as a genius in its tax avoidance strategy, with the Chairman Eric Schmidt, calling the schemes legitimate in a 2012 interview. He said the company paid taxes "in the legally prescribed ways".
"I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate," Schmidt said.
"It's called capitalism. We are proudly capitalistic. I'm not confused about this."