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Orange weighs into Google tax row by criticising 'unfair' tax breaks

Google tax

The deputy chief executive of telecoms company Orange has slammed the attitude of Silicon Valley firms towards paying tax in Europe, following a recent raid on Google's Paris headquarters.

Investigators acting on behalf of the state financial prosecutor seized documents and computer hard drives at the offices, in a bid to search for evidence of aggravated financial fraud and money laundering.

Gervais Pellissier,  whose company is still 23 per cent owned by the French taxpayer, says he is pleased by the efforts of the authorities to “level the playing field” with Google, adding that the company, along with other internet players were profiting from current infrastructure, while telecoms firms were still expected to pay tax.

He told the Daily Telegraph: “We think the way that tax is collected today makes us a very easy target because we have physical infrastructure. We think there is a need for a level playing field.”

“I don’t understand people in the Valley. How can they live in a state that has a shortage of water, shortage of electricity, and where the roads are a disgrace?

“Those guys are not even ready to finance the municipality of their headquarters. This is incredible.”

Google has claimed that its operations in France are not part of a permanent establishment, but are in fact a mere satellite of its Irish business, routing billions of pounds in annual advertising sales through Dublin, taking advantage of the Republic of Ireland's low level of corporation tax, while avoiding the 33 per cent rate imposed in France.

A similar scheme was used by the company in the UK until it faced a clampdown and had to pay HMRC £130 million earlier this year.

Despite the UK's dim view of Google's tax dealings, the company insists it has not done anything illegal in France, adding that it has operated within French tax law.

Nevertheless, pressure on the tech giant from authorities across Europe looks to be growing, with the EU paying closer attention to its digital economy and how it can fit in on the world stage.

Reports have already suggested that competition authorities are set to hand the company a significant fine over allegations it has abused its web search monopoly.

Other major tech companies, including Facebook and Apple have also seen their tax dealings in Europe placed under scrutiny recently, amid increased fortunes over the past decade.

According to a study by Moody's Investors Service, the US technology sector amassed $777 billion in cash at the end of last year, accounting for nearly half of the $1.68 trillion held by non-financial companies in the country.

Five companies are thought to account for $504 billion of that total, with 90 per cent of that cash allegedly being held in overseas accounts.

That left some US lawmakers to call on the money to be brought back home as it looks to reduce the country's deficit.

Nevertheless, the actions against Google have been so extensive that it has even sparked accusations of an unfair and coordinated campaign.

However those suggestions have been rejected by Pelissier, who added: “The European Union is not the Soviet Union, nor even the USA with coordination of the different agencies. I don’t believe it. I would be happy if we were strong enough to do that.

“Digital power is such that it creates very quick dominance which is very powerful and makes it very difficult for somebody else to come in. This is why some of the debates on Google are important.”​