Google has agreed to pay 130 m in back taxes after an “open audit” of its accounts by the UK tax authorities.
The company had been accused of “not its fair share” of taxation, and criticised for complex taxation structures.
Senior figures at the technology fellowship have said that they want to draw a line under the issue.
“Today we announced that we are going to be paying more taxation in the UK, ” Matt Brittin, the heads of state of Google Europe, told the BBC.
“The governs are changing internationally and the UK government is taking the lead in applying those rules so we’ll be changing what we are doing here.
“We want to ensure that we pay the right amount of tax.”
Google’s move comes after a six year investigation by Her Majesty’s Revenue and Customs( HMRC ).
It acted after controversy over the low level of taxes pay back multinational enterprise that operate in the UK but are headquartered abroad.
Despite the UK being one of Google’s biggest groceries, it paid 20.4 m in taxes in 2013.
The value of its sales in Britain that time was 3.8 bn.
The company has been criticised for its complex international taxation structures.
Its European headquarters are in Ireland which has a lower firm tax rates than the UK.
It has also utilized fellowship structures in Bermuda – where the corporation tax rates is zero – to shelter profits.
Such moves are legal and Google says it has abided by international taxation rules.
It is an American business, meaning that it offers the majority of its taxes there.
Google has now agreed to change its accounting system so that a higher amount of sales act is registered in Britain rather than Ireland.
It has pledged to pay more taxation on those sales in the future.
It has also said that it will use a different arrangement to account for its earnings in the UK from 2005 until 2015.
“We are paying 130 m in respect of previous years when the relevant rules were to pay in respect of earnings you attain in a country and then move forwards the authorities concerned will too be paying in respect of sales to UK purchasers, ” Mr Brittin said.
Didn’t the back remittances, I expected Mr Brittin, show that Google’s reviewers were right that the company had avoiding taxation in the past?
“No, ” Mr Brittin replied.
“We were relating the relevant rules as they were and that was then and now we are going to be applying the new governs, which means we will be paying more tax.
“I think there was concern that international companionships were only in respect of earnings that they make and those were the arrangements and the pressure was to see us pay in respect of the sales we attain to UK purchasers – and the same for other companies.
“So, we are making a change because we want to continue to comply with the rules and the relevant rules are changing.”
An HMRC spokesman said: “The successful conclusion of HMRC enquiries has secured a substantial solution, which means that Google will pay the full taxation due in rule on earnings that belong in the UK.
“Multinational companies must pay the tax that is due and we do not accept less.”
He added that HMRC enforces taxation governs regardless of the size of the company.
Google, along with other American companionships such as Facebook, Amazon and Starbucks, have faced heavy review for their taxation affairs.
Margaret Hodge MP, the former chairwoman of the Parliamentary Public Accounts Committee, describe its taxation structures as “devious, calculated and, in my opinion, unethical”.
She said that Google was avoiding its “fair share” of tax.
Global tax governs have been stiffened over the past year, with the Organisation for Economic Cooperation and Development( OECD ), which produces lead on world taxation correspondences, went on to say that multi-national companies should not deliberately move earnings to different countries to avoid tax.
“I belief the international rules are quite complicated and the OECD has just gone through a big process to try to simplify them and that is why the relevant rules are changing, ” Mr Brittin said.
“If we were British, we would attain most of our earnings in the UK and we’d be paying much more taxation in the UK.
“The realities are we are an American fellowship and that is where we pay the majority of our taxes, that is where we attain the majority of our profits.
“But what is changing is outside the US, in international markets, we will be paying now in respect of our sales , not only our profits.”
Mr Brittin said the UK was a strong market for Google.
“I think it is right that where there is public headache and where politicians and the press are concerned about international companionships – not just us – when the relevant rules change you should change with them and we have done that, ” he said.
“Of course what you want to be doing as a business is focusing on constructing amazing produces and hiring beings and helping the UK attain the most of the internet opportunity and that is what we want to spend our time doing.”
Read more: www.bbc.co.uk