Google agrees to pay £130m tax bill

Search giant says it will pay tax according to UK revenues from advertisers

Money

Google has agreed to pay the UK government its 130 million tax bill for the last ten years of its operation in the UK.

The company also agreed to start paying tax according to the law in future, meaning this issue should not come up again. A statement by the company said it would "pay tax based on revenue from UK-based advertisers, which reflects the size and scope of our UK business."

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However, the internet giant said it had not been avoiding tax in the past, but had been paying what it believed it owed based on the previous tax laws.

"We were applying the rules as they were and that was then and now we are going to be applying the new rules, which means we will be paying more tax," Matt Brittin, head of Google Europe said.

The news comes as the government has started to crack down on some of the biggest technology companies and retailers in the world, trying to recoup money the corporations have previously avoided paying.

Also under investigation for avoiding paying the tax they owe on revenues from their UK business are Amazon and Apple, who have previously used loopholes in the law to avoid paying taxes on revenues generated in the European Union.

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Methods include setting up companies in Luxembourg, Ireland and the Netherlands, which all have more relaxed laws. Additionally, some UK legislation makes it easy for companies to transfer funds into tax havens around the world, including Bermuda.

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However, the law changed in January 2015, stating online businesses, such as those targeted by the UK government of late, have to pay VAT in the country of the purchaser rather than the country where the business is registered.

In March, it was added that those who channeled sales into other countries would have to pay a 25 per cent levy on profits too, scraping back some of the money dissipated into some of the world's biggest companies' bank accounts.

Both Amazon and Apple have agreed to pay back a big slice of the money they owed last year and now many of the other companies using these loopholes are agreeing to pay.

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