Google to pay $185 million UK back taxes, critics want more

Fri Jan 22, 2016 7:47pm EST
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Tom Bergin

LONDON (Reuters) - Google said on Friday it agreed to pay the UK tax authority 130 million pounds in back taxes, prompting criticism from campaigners and academics who said the UK tax authority had agreed a “sweetheart deal”.

Google, now part of Alphabet Inc (GOOGL.O: Quote), has been under pressure in recent years over its practice of channeling most profits from European clients through Ireland to Bermuda where it pays no tax on them.

In 2013, the company faced a UK parliamentary inquiry after a Reuters investigation showed the company 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 said the UK tax authority had challenged the company’s low tax returns for the years since 2005 and had now agreed to settle the probe in return for a payment of 130 million pounds.

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.

A finance ministry spokeswoman welcomed the deal saying,“This is the first important victory in the campaign the Government has led to ensure companies pay their fair share of tax on profits made in the UK and is a success for our new tax laws”.

However, Prems Sikka, Professor of Accounting at Essex University said the settlement looked like a “sweetheart deal.”   Continued...

 
The neon Google sign in the foyer of Google's new Canadian engineering headquarters in Kitchener-Waterloo, Ontario January 14, 2016. REUTERS/Peter Power