Google UK has been accused of avoiding paying a huge UK tax bill.
The Times newspaper reported that the search engine giant pulled in £1.6bn in advertising sales, which accounts for a sizeable 14% slice of its global revenues. Yet it only paid £141,519 in tax.
Google has managed to swerve the tax bill because it is registered in the EU in Ireland, which has far more favourable levels of corporation tax than the UK. If Google were registered in the UK, its tax bill would have been closer the £450m mark.
Google has simply followed a path taken by many other large multinationals. Through a practice called ‘transfer pricing’ Google is legitimately able both to pay tax in Ireland and report taxes in the higher tax regime of the UK, enabling the firm to report a pre tax ‘loss’ of £26m on a turnover of £141m.
Although everything Google has done is above board, comments from Liberal Democrat deputy leader Vince Cable, reflect how current feeling during the recession makes this kind of practice less palatable to the public.
“When the country is in recession and everyone is feeling the pain, it really sticks int eh throat – it means higher taxes for the rest of us,” said Cable in The Guardian newspaper.
The Internet firm has around 800 UK staff in London.
