Turkey Suing Google for $47M in Back Taxes

Dear World:

Google is advertising in your countries.

Duh.

Turkey has recently determined that Google owes them $47M US (71M Turkish lira) in back taxes on advertising sold in Turkey. The government maintains that because Google sells advertising in Turkey and maintains an office and registered subsidiary in the country.

Google, on the other hand, points out that “it runs its ad network operations from Ireland and thus is not obliged to pay taxes in Turkey merely because it owns a subsidiary there.” The suit recognizes that bills and checks (or should I say cheques?) for such advertising are addressed from/to the company’s European headquarters in Dublin.

Says TechCrunch:

In a statement, Google said it is acting in accordance with the tax laws of every country in which it operates, including Turkish laws, and that its negotiations with the government on this issue are ongoing. . . .

We’ve also been in touch with a Turkish lawyer, who tells us the government is making a valid claim, pointing out that Google has set up a full-fledged company called Google Reklamcılık ve Pazarlama Ltd. Şti. (which means Google Advertising and Marketing Ltd.) in Turkey rather than what he refers to as a ‘liaison’ branch. Had it done the latter, says the lawyer, the company would have had to pay very little or no taxes at all.

Personally, I’m a little skeptical of the Turkish government’s claim, mostly because if Google has really been taxable all this time (and since Google is the #1 online and search ad company in Turkey), they (the government or Google) would have figured this out a lot sooner. Did the Turkish government just figure out they could tax Google? Or is this, as TechCrunch points out, just a bargaining tactic tor force Google’s negotiations to go faster?

(Note: the Turkish government says they’ve determined this after a year of investigating. Again, a year? It doesn’t take a year to figure out that someone should be paying you taxes, especially not if a Turkish lawyer can figure it out in one email. If they really wanted the taxes, they could have indicated that Google should be paying taxes at the beginning of the investigation instead of stalling a year while Google racked up more income that they could penalize. I think being dishonest like that should be reason enough to lose the suit.)

Here’s what I think: if you really want to tax Google, countries of the world, then do it—but pass a new law that they can’t get out of. Don’t try to cobble together a legal argument, backform your present laws that may or may not fit the situation, or stall an entire year to try to squeeze more out of them. Because, after all, taxing Internet companies for selling stuff in your jurisdiction has worked really well in New York, North Carolina, etc.

What do you think? Will Turkey get their cash, will the case get thrown out, or are they really just hoping for Google to settle for any amount? Will this make Google reluctant to operate in that country in the future?

Amazon to Re-Kindle Ad Revenue?

Amazon apparently has some big plans for their Kindle e-reader and it involves advertising. That’s right, advertising. After all, what would a good book be without advertising, right?

cnet news reports about some patents that Amazon has filed in the not so distant past that point to a way or them to deliver an e-book with the traditional book. By putting together ad supported e-books and bundling them at little or no additional cost to the reader Amazon moves a step closer to changing the way people read in the future.

The Kindle and other e-readers require a paradigm shift for those who are not inclined to try new technology just because it is new. Just like people who say that they always want to open a newspaper and get ink on their hands, there are folks who feel that reading one book at a time is just fine and there is no need to carry a library in their pocket. Those pesky traditionalists are the folks that Amazon needs to introduce to the e-book concept in a way that gently nudges them to a new behavior that they wouldn’t otherwise try on their own.

Amazon Technologies, a subsidiary of Amazon, filed for a patent (”Method and system for access to electronic version of a physical work based on user ownership of the physical work”) in December 2006. It was approved last month and makes it possible for buyers of a physical book to have an e-book bundled with it.

But two additional patents, filed a year later by Amazon employees (and not yet approved), are the more interesting ones: these, according to MediaPost, “clearly note that Amazon would insert advertisements throughout the e-books, from the beginning to the end, between chapters or following every 10 pages, as well as in the margins.”

I have to admit that I really don’t care if ads are inserted in books because I have developed such severe ad blindness that I might not even blink. Imagine the day though when the ad is actually part of the story, like product placement in the movies. That’s when the real fun begins.

So do you think having an ad in your book is too much? Have you made the switch yet or are you going to be OK with having a few trees die for your reading enjoyment? Now that wasn’t fair was it?