A flush is valued above finishes
February 14, 2014
The battle at Westminster for political centre ground
December 18, 2015

Google doubles its payment of foreign tax

The internet giant paid $771 million (£463.4 million) in non-US corporation tax on foreign profits of $8.67 billion — equivalent to a rate of 8.9%, which is low compared to typical UK companies.

However, that was more than double a year earlier when Google paid  $358 million in overseas tax or 4.4% on profits of $8.08 billion. Google’s foreign tax rate was even lower at 3.2%  in 2011.

Its annual report did not explain why its foreign tax bill increased or give a breakdown by country.

Google has been under pressure to pay more tax after Commons Public Accounts Committee chairman Margaret Hodge claimed it was “evil” for paying so little corporation tax in Britain, its biggest market after America.

The search giant’s most recent annual UK corporation tax bill was only  £11.2 million, despite British turnover running at £3.5 billion a year or 10% of its worldwide revenues.

The web giant legally avoids tax by choosing to process virtually all its non-US sales offshore in Ireland and then funnelling the profits to tax havens such as Bermuda.

France hit Google with a reported  €1 billion (£821.6 million) claim for tax last month and President François Hollande said on a visit to America this week that it was “not acceptable” for tech giants to shift profits offshore.

Google has amassed an enormous  $33.6 billion cash pile overseas.

The web giant, which owns YouTube and the Android mobile operating system, pays more tax in America as it does not funnel those revenues offshore. Last year’s bill for US federal and state taxes was $1.96 billion on domestic profits of $5.83 billion — a rate of around 33.7%

However, its low overseas tax bill and the benefit of deferred taxes cut Google’s overall rate to 15.7%. Group profits were $12.92 billion on sales of  $59.83 billion.

Amazon, Facebook and Apple have also come under fire over offshore tax avoidance as UK companies such as John Lewis and Sainsbury’s say they are trading at a significant disadvantage. UK corporation tax is 23%.

Google, with a stock market value of $400 billion, recently overtook Exxon to become the world’s second  most-valuable listed company  behind Apple.