Google: $185 Million in U.K. Tax Settlement

$185 Million in U.K. Tax Settlement
By Brian Womack

January 22, 2016 — 2:25 PM PST Updated on January 22, 2016 — 3:03 PM PST

Google parent Alphabet Inc. has agreed to pay 130 million pounds ($185 million) in a tax settlement with U.K. authorities after the Web company came under scrutiny over how much it pays on its profits in Europe.

Google will adopt a new approach for U.K. taxes and the settlement covers taxes going back to 2005, the company said in an e-mailed statement Friday. Alphabet, which owns the Google search engine, has faced criticism for paying a fraction of the sales in taxes from the U.K. For example, the tech giant paid $16 million in U.K. corporation tax from 2006 and 2011 on $18 billion of revenue, according to a panel in 2013.

Alphabet has faced sharp rebukes from critics and regulators in Europe for using innovative tools to keep its tax rates lower in some regions. Separately, Apple Inc. is facing a European tax investigation that could force the iPhone maker to pay more than $8 billion in back taxes. European officials have accused the iPhone maker of using subsidiaries in Ireland to avoid paying taxes on revenue generated abroad.

“We have agreed with HMRC a new approach for our U.K. taxes and will pay 130 million pounds, covering taxes since 2005,” Google said in a statement Friday, referring to the British tax authority. “We will now pay tax based on revenue from U.K.-based advertisers, which reflects the size and scope of our U.K. business.”

Google has avoided billions of dollars of income taxes around the world using a pair of shelter strategies known to lawyers as the “Double Irish” and “Dutch Sandwich,” as first reported by Bloomberg in October of 2010.

Her Majesty’s Revenue and Customs said it enforces tax rules impartially -- regardless of a company’s size.

“The successful conclusion of HMRC enquiries has secured a substantial result, which means that Google will pay the full tax due in law on profits that belong in the U.K.,” the HMRC said in a statement. “Multinational companies must pay the tax that is due and we do not accept less.”


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