Google Defends Tax Affairs From New Scrutiny

Google's tax arrangements are under further scrutiny after it revealed paying £11.6m in corporation tax last year on UK sales said to be as high as £3.5bn.

The US technology firm, which has faced Parliamentary criticism amid suggestions of tax avoidance in the past, has consistently argued it operates within the law.

The company, which recently celebrated its 15th birthday and employs around 2,000 people in the UK, said it paid the Treasury £156.1m in total during its last financial year.

The Daily Telegraph, citing filings at Companies House, reported its UK revenues for 2012 at £506m but Reuters said its total UK sales stood at £3.5bn.

Google's tax affairs rose to prominence again in June when a report by MPs found Google had made around £11.5bn in revenue from the UK between 2006 and 2011 but paid just £10m in corporation tax.

The Public Accounts Committee called for an HMRC investigation amid evidence from apparent whistleblowers while a Reuters investigation alleged that Google's UK staff were responsible for sales rather than marketing as the company has always insisted.

A Google spokesperson said: "Like most multinationals, we pay the bulk of our £1.2bn corporate tax bill where our business originated, in our case the US.

"That’s a rate of more than 19%, roughly what a UK-based company would pay.

"We’re also a significant contributor to the UK economy- having created over 2,000 jobs.

"This year alone we’ve invested more than £300m in property, and tax related to our UK operations totalled more than £150m."

Reuters journalist Tom Bergin, who conducted the news service's investigation into Google's tax arrangements, told Sky News he believed it was an "incredibly low" effective corporate tax rate.

He said: "Google reports half of its profits in Bermuda where it pays no tax so that's why Google has one of the lowest tax rates on its non-US income among any company.

"Google pays around three percentage points tax on its overseas profit so it is true when it comes to paying tax one of the few countries where Google does pays tax is the US.

"Of course, that's because the US tax rules are considerably stronger than they are here in Europe and particularly in the UK.

"So Google cannot possibly avoid paying tax in the US but when it comes to Europe and the UK it is a different matter," he concluded.