Google Agrees To Pay $185 Million In Back Taxes To UK Goverment


After a year-long investigation by authorities pertaining to tax evasion, Google has finally agreed to pay back the UK government £130 million or about $185 million, which it owes it as taxes.

The move follows the inquiry into Google's existing tax arrangements and covers Google for the last decade. For the unfamiliar, Google's tactics of tax reduction in the UK were being investigated by Her Majesty's Revenue and Customs (HMRC).

On Friday, the accord was disclosed amid increasing criticism that not only Google, but several major U.S,-based companies were manipulating their tax payments to evade paying higher amounts. Google has been criticized for not paying the necessary taxes in the UK, along with other U.S. companies such as, Starbucks and Facebook.

For years, Google has been able to reduce its taxes in the UK by having its headquarters in Ireland, as the tax rates in the country are lower. This strategy has aided the company in giving a fillip to its profits and increasing its stock price, which in turn translate to a fat bank account.

To illustrate, in 2013, Google paid £20.5 million or $29.2 million as taxes in the UK on revenue generation of £3.8 billion or $5.4 billion.

Now according to the deal, Google will be reimbursing the HMRC for the taxes it did not pay the UK government in the past 10 years. Google will not only be shelling out £130 million or $185 million, but also has a new tax arrangement in place with HMRC.

The £130 million or $185 million is inclusive not only of taxes Google failed to pay since 2005, but also the interest accrued on the amount.

"We have agreed with HMRC a new approach for our UK taxes and will pay STG130 million, covering taxes since 2005," reveals a spokesperson for Google spokesperson.

Adding that going forward, the company will "pay tax based on revenue from UK-based advertisers, which reflects the size and scope of our UK business."

According to the deal, Google will be paying taxes on the revenue it generates from advertisers who are based in the UK. Google says that its settlement with the UK government is in keeping with the OECD guidelines.

The treasury in Britain calls the deal with Google "the first important victory in the campaign ... to ensure companies pay their fair share of tax on profits made in the UK." It is also being viewed as a win for the country's new tax laws.

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