Google to pay UK $185 million in back taxes | Europe| News and current affairs from around the continent | DW | 23.01.2016
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Google to pay UK $185 million in back taxes

Following a multiyear investigation by UK authorities, Google has agreed to pay back taxes to 2005. The amount has been criticized by opposition lawmakers, who believe the amount is "a public relations sop."

Google agreed to pay 130 million British pounds ($185 million, 172 million euros) to the UK in back taxes following a six-year probe by Her Majesty's Revenue and Customs (HMRC) authority.

"We have agreed with HMRC a new approach for our UK taxes and will pay 130 million British pounds, covering taxes since 2005," said a Google spokesperson.

The agreement comes amid mounting criticism against major corporations that use tax-shielding techniques to pay lower taxes, with Apple agreeing to pay Italy 318 million euros to settle a similar tax dispute last month.

In 2015, the Organization for Economic Cooperation and Development (OECD) said national governments lose between $100 billion to $240 billion a year from multinationals' tax-minimizing schemes.

"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," the spokesperson added.

'Public relations sop'

However, critics of the deal voiced concern that the amount was relatively insignificant compared to the company's profits in the UK market.

John McDonnell, the opposition Labour party's shadow finance minister, called on the HMRC to publish the details of its agreement with the technology giant.

"Paying only 130 million British pounds for 10 years backlog looks like [a] public relations sop," the opposition MP said in a tweet.

In the first nine months of 2015, Google's UK ad revenue amounted to $5.1 billion, amounting to 10 percent of the company's revenue during the period.

Substantial result?

The HMRC hailed the deal, saying its inquiries "secured a substantial result."

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

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

British Finance Minister George Osborne welcomed the agreement, saying "it was good to see Google paying more tax on past profits."

Google and its parent company Alphabet Inc. have some $73 billion in cash, of which approximately half is kept outside the US. Its European headquarters is based in Ireland, where it pays relatively low taxes.

ls/rc (Reuters, AFP, AP)