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Google to Pay British Authorities £130m in Back Taxes

Earlier this month we reported on Apple paying a hefty fee in back taxes to the Italian government, and now it looks like Google will follow suit by way of the UK. Google has agreed to pay a decade's worth of back taxes and to bear a greater tax in the future to compensate for underpayment of UK taxes. In paying £130m, the deal will cover a decade of underpayment of UK taxes by the company, which has been criticised in the past for its tax avoidance policies.

It's time to pay the taxman!

Google has previously defended their tax record, telling a US Senate inquiry last year that it was "simply the way the global tax system is working" and that the issue was for politicians to fix. Executive chairman of their parent company Alphabet, Eric Schmidt, has previously stated that Google was not doing anything wrong because they have complied with tax laws around the world.

Critics of the deal, to include Richard Murphy, director of the campaign group Tax Research, label the recent agreement as a "sweetheart deal" that does not represent value for the British taxpayer. Murphy states that "We are claiming back a tiny extra proportion [of what Google has underpaid], way short of any reasonable amount of tax," he said. "It looks as though Google has got a great deal, it must be laughing all the way to its Bermudan bank." Many argue that the £130m payment is a drop in the bucket when compared to Google's enormous financial dealings within the UK.

Ultimately, this extraordinary tax rate will not be offered to any other company. The new rate roughly works out to less than the 20% corporation tax due on profits in the UK, leaving may to and question how the £130m figure had been reached.

The question remains as to whether or not Google has been skirting taxes in the UK by diverting its revenues to Ireland, its European headquarters (as we saw with the Italian Apple agreement). Such dealings are at best devious and unethical, if not downright illegal. It will be interesting to see how the Apple and Google back tax agreements impact international tax laws moving forward from here.

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Wednesday, 22 November 2017
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