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UK Prime Minister David Cameron has sought to defend an agreement under which Google will settle GBP130m (USD185.4m) in back taxes.
Google announced last week that it had agreed with HM Revenue and Customs (HMRC) a "new approach to its UK taxes." It will pay GBP130m in back taxes as part of a settlement covering the period since 2005. Google will "now pay tax based on revenue from UK-based advertisers, which reflects the size and scope of our UK business," the company said.
Cameron was asked to state his position on the deal during Prime Minister's questions on January 27. Jeremy Corbyn, the Leader of the Opposition, told Parliament that "independent experts have suggested that Google is paying an effective tax rate on its UK profits of around three percent," and asked Cameron if he disputed that figure.
Cameron replied that the tax in question "should have been collected under a Labour Government" but is now "being raised by Conservative Government." He said "the tax rate for Google was zero percent" under the previous Labour administration.
According to Cameron, "Google's taxes are going up under this Government." He added: "We have changed the tax laws so many times that we raised an extra GBP100bn from business in the last Parliament. When I came to power [in 2010], banks did not pay tax on all their profits - allowed under Labour, stopped under the Tories; investment companies could cut their tax bill by flipping the currency their accounts were in - allowed under Labour, stopped under the Tories; and companies could fiddle accounting rules to make losses appear out of thin air - allowed under Labour, stopped under the Tories. We have done more on tax evasion and tax avoidance than Labour ever did. The truth is that they are running to catch up, but they haven't got a leg to stand on."
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