Advertisement

Google Pays Millions In UK Back Taxes

Google has reached a deal with the British taxman to pay £130m in back taxes.

The agreement covers payments back to 2005, the internet company said.

"We will now pay tax based on revenue from UK-based advertisers, which reflects the size and scope of our UK business," a spokeswoman said.

"The way multinational companies are taxed has been debated for many years and the international tax system is changing as a result. This settlement reflects that shift and is in line with recent OECD guidance."

An HM Revenue and Customs (HMRC) spokesman confirmed it had reached a deal with Google.

"The successful conclusion of HMRC enquiries has secured a substantial result, which means that Google will pay the full tax due in law on profits that belong in the UK," the spokesman said.

"Multinational companies must pay the tax that is due and we do not accept less.

"HMRC enforces the tax rules impartially, irrespective of the size or structure of the business. Last year our compliance activities yielded £26bn in extra tax, including £7.3bn from the largest and most complex businesses."

Google paid just £20.5m in tax in 2013, despite raising $5.6bn in revenues in the UK, according to FT Weekend.

HMRC has been investigating if Google avoided paying tax by allocating profits to Ireland (Other OTC: IRLD - news) , the home of its European operations.

In March's Budget Chancellor George Osborne announced the introduction in April (LSE: 0N69.L - news) of a so-called "Google tax" targeting firms that move their profits overseas.

The "diverted profits tax" is designed to discourage large companies from taking earnings out of the UK to avoid tax.

Mr Osborne also said he would close tax loopholes that enabled businesses to take account of foreign branches when reclaiming VAT on their overheads, with the new tax measures expected to raise £3.1bn over the next five years.

In September shadow chancellor John McDonnell told the Labour conference that if elected in 2020 the party would launch an "aggressive" drive to ensure multinational corporations pay "their fair share of taxes" as part of a bid to balance the nation's books fairly.