Google to pay $286m in back taxes to Britain

Technology giant Google has agreed to pay close to US$200 million (S$286 million) in back taxes to Britain.
Technology giant Google has agreed to pay close to US$200 million (S$286 million) in back taxes to Britain.PHOTO: AFP

SAN FRANCISCO • Google has agreed to pay close to US$200 million (S$286 million) in back taxes to Britain, making it the latest American technology company to settle claims that it does not pay its fair share of taxes in Europe.

The sum covers taxes from 2005 to last year. Google said it would change how it calculates its tax payments in Britain so they are based on a percentage of local sales derived from the country.

In April, Britain adopted a so-called Google tax that would impose a levy on any international company that did not fairly pay taxes on profits generated from its British operations.

Google, which is now owned by a holding company called Alphabet and has its European headquarters in Ireland, is hardly the only American technology company with European tax problems.

Various countries, including Germany and France, have criticised the complicated tax structures tech companies use to reduce their local taxes. Many of them route sales through lower-tax countries like Ireland, even if the sales are made in other nations.

In May, Amazon, which had been funnelling most of its sales taxes through Luxembourg, a low-tax haven, said it would start paying taxes in European countries where it has large operations.

Apple reached a deal to pay local Italian tax authorities in December after the authorities there looked into whether the company tried to lower its taxes by moving more than US$1 billion in revenue from its Italian operations through an Irish subsidiary.

The executive arm of the European Union, the European Commission, is also investigating whether Apple and Amazon receive unfair state support through low-tax agreements in Ireland and Luxembourg.

NEW YORK TIMES

A version of this article appeared in the print edition of The Sunday Times on January 24, 2016, with the headline 'Google to pay $286m in back taxes to Britain'. Print Edition | Subscribe