Google’s attempt to counter criticism of its tax arrangements by agreeing to make a back payment of £130m in the UK unravelled after claims that the internet giant had effectively paid an annual rate of corporation tax of just 2.77% over the last decade. Most British businesses currently pay corporation tax on 20% of their profits. But even after the extra payment, the internet giant is said to have paid just £200m in tax since 2005, on estimated profits in the UK of £7.2bn.
Professor Prem Sikka, a tax avoidance expert at the University of Essex, estimated that the company has avoided around £1.6bn in taxes over the decade, despite earning 10% of its global revenues in the UK. Sikka made the claim in response to a deal under which Google agreed to pay £130m in additional tax, on top of the £70m it has already paid on its profits in the UK since 2005.