Jan 25, 2016 08:33 AM EST
Google, the global search engine provider, has agreed a deal with the Her Majesty's Revenue and Customs (UK) (HMRC), Britain's revenue service, to pay £130 million in back taxes. The tech giant has also pledged for bearing greater tax burden in future. The deal paves the way to pay more taxes in many countries including the US accusing it with other multinationals for aggressive tax avoidance.
Past underpayment of tax in the UK, enduring over a decade has been covered with the agreement. The deal appears after a multiyear audit by HMRC aimed to unearth Google's tax dodging through allocating profit to Ireland, its European Operations Headquarter, reports CNBC.
Google has paid only £20.5 million in tax during 2013 to UK, its largest market outside the US, based on attributed profits despite posting sales revenue of $ 5.6 billion. The tax structure has apparently led former chair of the UK parliamentary public accounts, Margaret Hodge to accuse it for 'immortal' activities.
The search engine giant has previously defended records saying it pays taxes following simply the way of global tax system. But getting a U- turn from earlier stance, a Google spokesperson has confirmed paying tax based on revenue collected from UK advertisers. The tax amount will reflect the size and scope of business of Google's UK portfolio, reports The Guardian.
The tax dodging event by multinational firms like Google, Amazon and Facebook, to the UK government has been reflected as rising concerns for the British news media. HMRC in 2013 has hinted investigating Google's account for probable tax dodging. The successful conclusion of HMRC inquiries has secured a substantial result leading to agreement on full tax due on profits in the UK, reports BT.com quoting HMRC spokesperson.
The deal may appear as precedence for other companies since Google will have to pay a share of its revenues from UK advertisers in tax, in line with its existing profit based formula. It may also lead Google agreeing to pay more tax in other European countries conducting tax investigations. Meanwhile, the software giant faces a tax dodging allegation for dodging taxes up to €1 billion in France.
The UK government has moved while a number of governments are cracking down on multinational companies. The crack down aims to investigate shifting profit overseas to reduce tax in countries with larger workforce having significant sales revenue. The investigations are being conducted in accordance with a guideline introduced by The Organization for Economic Co-operation and Development (OECD).
Google has been reported to face tax dodging investigations along with other multinationals in many countries around the world. Its critical tax calculation system has been found flawed by a HMRC investigation and compels the tech giant to get agreed paying £130 Million as back unpaid taxes. Google has also been forced to pledge for bearing higher tax burden calculated on the basis of sales revenue collected in the UK.
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