Google to pay millions in back taxes to the UK

Google to pay millions in back taxes to the UK

Today isn’t a good day for Google’s relationship with Europe. After a six-year inquiry by UK tax authorities and an open audit, BBC reported today that the company will have to pay £130 million (more than $185 million) back to the country.

The final order was the result of many criticisms from within the country that major companies headquartered abroad weren’t paying fair taxes for their work within the UK. Google, for example, paid just £20.4 million in taxes despite raking in £3.8 billion in sales.

Google will also have to change its accounting process to shift a more considerable proportion of sales to Britain, rather than reporting them in Ireland.

Using foreign countries — like Ireland specifically — to create favorable tax outcomes for big businesses is such an open secret that the tactic, called a “Double Irish,” has its own Wikipedia page.  But that doesn’t stop critics, both in the US and abroad in Europe, from asserting that Google and companies like it pay their “fair share” of taxes.

Global tax rules are undergoing a change, so it will be interesting to see whether tech companies will have the tax tides turn against them for their complicated structures.

Google agrees £130m UK tax deal with HMRC [BBC]

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