According to the Wall Street Journal last week, Google was negotiating with France and other European governments to settle disputes about tax liability. It was reported by Bloomberg that Google has finally agreed to pay the equivalent of $185 million in UK taxes. This amount covers a five-year period from 2006 to 2011.
The company says that they have agreed to pay future taxes in the UK more commensurate with UK revenue, saying that “We will now pay tax based on revenue from UK-based advertisers, which reflects the size and scope of our UK business.”
Up until this point, Google was paying most of their taxes through their Irish subsidiary, due to the fact tax rates are lower. Because Google was paying taxes in this way, there has an outcry in the UK and other European counties. Google wasn’t the only company being criticized about these tax avoidance tactics, as government officials pointed fingers at Apple, Amazon and other US tech companies as well.
In the Bloomberg report, Google only paid $16 million in UK taxes on roughly $18 billion in revenues during the disputed time frame. Google defended themselves saying that they were in compliance with UK tax law, and was contributing significantly to the economy in the UK.
There’s a good chance that with Google paying these taxes, there’s a good chance more tax claims could begin rolling from other countries soon, whether it be in a couple weeks a a few months.