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Google Pays Modest Tax On UK income, Reports Claim

by Robin Pilgrim, LawAndTax-News.com, London

29 December 2009


The UK press has become critical of internet giant Google after accounts were published that appear to indicate that the company paid minimal UK corporate income tax.

According to reports, Google Inc's consolidated accounts indicate that the UK is the second most important source of revenue to Google after the US, with UK-sourced revenues of USD21.8bn in 2008 – representing 14% of total worldwide income. Yet the accounts allegedly show that Google paid only GBP141,519 in tax on "other earnings" in the UK.

Google UK's principal activity is stated to be "the provision of marketing services to Google Ireland Limited and the provision of research and development services to Google Inc" in the USA.

The Google Ireland Ltd latest accounts show that just EUR7.5m in Irish tax was paid in 2008, on EUR6.7bn of gross revenues amassed from the UK and other EU countries.

None of the newspaper analysts sought to explain how the UK revenue of USD21.8bn recorded in consolidated accounts could be so far in excess of the total of European revenues booked in the Irish company. But Sky News did suggest as a result of "guesswork" that more low-taxed income was booked in Google's Bermuda companies.

Peter Barron, director of communications for Google in northern Europe, told the Sunday Times that:

“Google makes a big investment in the UK, with over 800 employees, and we make a substantial contribution to local and national taxation. But the fact is that our European headquarters is in Dublin. We comply fully with the tax laws in all the countries in which we operate.”

This comprehensive report in our Intelligence Report series examines the global and national landscapes in which companies can use transfer pricing to improve their after-tax returns, including summaries of recent developments in design of the corporate supply train, the usefulness of 'offshore' in international corporate tax planning, and a section covering the spread of DTAAs and CFC laws. It is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report16.asp

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