Prompting criticism from opposition MPs and campaigners who say the "derisory" figure smacks of a "sweetheart deal", Google has agreed to pay 130 million pounds ($264 million) in back taxes to Britain.
After a Reuters investigation showed the firm employed hundreds of sales people in Britain despite saying it did not conduct sales in the country, a key plank in its tax arrangements, Google faced a UK parliamentary inquiry in 2013.
The probe had challenged the company's low tax returns for the years since 2005, Google said the 130 million pounds would settle a probe by the British tax authority.
It said it had also agreed a basis on which tax in the future would be calculated.
"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," a Google spokesman said in a statement.
In order to clamp down on multinational companies shifting profits overseas to reduce their tax bills, a number of governments around the world are rtaking similar steps.
Arrangements used by Amazon and a unit of Fiat in Luxembourg, Apple in Ireland and Starbucks in the Netherlands have been investigated by the EU competition authorities and may start new probes.
It reflected new rules that he had introduced, said British Finance Minister George Osborne on Twitter while welcomed the deal. However others were less impressed.
Opposition, experts demand explanation of Google payment
The tax authorities needed to explain how they had settled on the figure of 130 million pounds, which he described as relatively insignificant said John McDonnell, finance spokesman for the opposition Labour party.
"It looks to me ... that this is relatively trivial in comparison with what should have been made, in fact one analysis has put the rate down to about 3 per cent, which I think is derisory," he told BBC Radio.
"This looks like another sweetheart deal."
For a company that enjoyed UK turnover of around 24 billion pounds over the period and margins of 30 per cent, the settlement represented an effective tax rate in the low single digits for Google said Prem Sikka, professor of accounting at Essex University while agreeing to John McDonnell views about the deal.
"This is a lousy number and we need to know more," he said.
Google’s main UK unit reported a tax charge of 52 million pounds and the company had UK turnover of 17 billion pounds between 2005 and 2013, filings showed.
According to its annual report Google had UK revenues of around 4 billion pounds in 2014 but has not yet published its UK tax charge.
(Source:www.abc.net.au)
After a Reuters investigation showed the firm employed hundreds of sales people in Britain despite saying it did not conduct sales in the country, a key plank in its tax arrangements, Google faced a UK parliamentary inquiry in 2013.
The probe had challenged the company's low tax returns for the years since 2005, Google said the 130 million pounds would settle a probe by the British tax authority.
It said it had also agreed a basis on which tax in the future would be calculated.
"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," a Google spokesman said in a statement.
In order to clamp down on multinational companies shifting profits overseas to reduce their tax bills, a number of governments around the world are rtaking similar steps.
Arrangements used by Amazon and a unit of Fiat in Luxembourg, Apple in Ireland and Starbucks in the Netherlands have been investigated by the EU competition authorities and may start new probes.
It reflected new rules that he had introduced, said British Finance Minister George Osborne on Twitter while welcomed the deal. However others were less impressed.
Opposition, experts demand explanation of Google payment
The tax authorities needed to explain how they had settled on the figure of 130 million pounds, which he described as relatively insignificant said John McDonnell, finance spokesman for the opposition Labour party.
"It looks to me ... that this is relatively trivial in comparison with what should have been made, in fact one analysis has put the rate down to about 3 per cent, which I think is derisory," he told BBC Radio.
"This looks like another sweetheart deal."
For a company that enjoyed UK turnover of around 24 billion pounds over the period and margins of 30 per cent, the settlement represented an effective tax rate in the low single digits for Google said Prem Sikka, professor of accounting at Essex University while agreeing to John McDonnell views about the deal.
"This is a lousy number and we need to know more," he said.
Google’s main UK unit reported a tax charge of 52 million pounds and the company had UK turnover of 17 billion pounds between 2005 and 2013, filings showed.
According to its annual report Google had UK revenues of around 4 billion pounds in 2014 but has not yet published its UK tax charge.
(Source:www.abc.net.au)
