Google to pay $140 million in back taxes in Britain

Google will pay 130 million British pounds ($185 million) in back taxes and higher taxes in the future, said the FT, which quoted a Google executive and an official with HMRC, Britain’s revenue service.

In a statement, the company said it had agreed a “new approach” with Her Majesty’s Revenue and Customers to cover taxes since 2005.

Friday’s action comes after a multiyear audit by HMRC, which sought to determine whether Google skirted taxes by allocating profits to Ireland, the base of the tech giant’s European operations.

“The way multinational companies are taxed has been debated for many years and the worldwide tax system is changing as a result”, a Google spokeswoman said. Google and its recently formed parent company, Alphabet Inc., have about $73 billion in cash.

In addition, Google, like many other companies, have company structures in Bermuda where the tax rate is almost zero for companies. “This settlement reflects that shift and is in line with recent OECD guidance”.

A spokesman for HM Revenue and Customs, the United Kingdom tax authority, said it doesn’t comment on individual taxpayers.

Richard Murphy, a tax expert who has advised the opposition Labour leader, Jeremy Corbyn, on economic policy, said the deal was “a disaster” and that, based on the turnover and margins Google enjoyed, “They should have been paying 200 million pounds a year”.

“HMRC now needs to assure taxpayers that it will keep up the pressure to tackle whatever the next emerging issue is in real time, rather than years later”.

“Today we announced that we are going to be paying more tax in the UK”, Matt Brittin, the head of Google Europe, told the BBC. It is effectively admitting it pulled in too little tax from Google for nine out of 10 years. However, it remains unclear whether the change will boost tax revenue for the countries because Amazon’s retail business has very thin profit margins.

The House of Commons Public Accounts Committee had previously accused the company of “aggressive tax avoidance”, adding it was not paying “its fair share of tax” in the UK.