Google's UK tax bill: £6m for a year when it made £395m

Google's UK tax bill: £6m for a year when it made £395m

Summary: The tech giant, already under fire for its tax management practices, is set to pay £6m UK tax in a year when its turnover was £395m - a rate of 1.5 percent

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This story has been updated to correct an inaccuracy in the figures initially confirmed by Google.

Google's UK subsidiary will pay £6m in tax for 2011, a year when its revenue was £395m. It's a tally likely to revive criticism over how much the tech giant contributes to the UK's coffers.

The tax bill, revealed in a filing by Google UK to Companies House on Tuesday, works out at around 1.5 percent of its revenue.

Google
Google is set to pay £6m in tax on turnover of £3.95bn in the UK

However, the 2011 payment is a jump in corporation tax for the company: in the six years to 2010, it handed over only £8m in total, according to figures reported by The Telegraph and confirmed by Google. Last year, the bill came to £935,000, against £2.39bn of revenue.

"We comply with all the tax rules in the UK," a Google spokesperson told ZDNet. "We make a big contribution to the UK economy by employing over a thousand people, helping hundreds of thousands of businesses to grow online and investing millions supporting new tech businesses in East London."

Google has come under fire in the past over the amount of tax it pays in Britain. While the UK is one of its largest markets, its European headquarters are located in Ireland, where corporate taxes are low. In addition, Google Europe pays a licensing fee of billions of Euros to its Bermuda subsidiary, which has the effect of lessening its tax burden in the region.

Google's chairman Eric Schmidt himself acknowledged a year ago that the company could make a bigger contribution in the UK.

"We could pay more, but it would be very hard to say to our shareholders 'we feel very sorry for these British people, so we're going to pay millions of dollars in extra taxes that we're not required to do'. There are probably laws against that," Schmidt said at the Edinburgh International Television Festival 2011, according to the Guardian.

In its filing on Tuesday, Google UK reported a loss after tax of £24.1m, after counting an employee share allocation cost of £51.45m. Without that, the subsidiary had a profit of £27m.

In May, it emerged that Google had made a loss in Australia and so paid $74,176 in corporate tax for 2011, down from $1.1m the previous year. Its New Zealand arm also lost money and ended up contributing only $109,000 in tax.

Topics: Google, Tech Industry

Karen Friar

About Karen Friar

Karen Friar is news editor for ZDNet in the UK, based in London. She started out in film journalism in San Francisco, before making the switch to tech coverage at ZDNet.com. Next came a move to CNET News.com, where she looked after west coast coverage of business technology, and finally a return to her homeland with ZDNet UK.

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14 comments
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  • Contempt

    I find the most accurate way to characterise gobal IT corporations like GOOG, APPL and MSFT ... is to class them as just the wrong side of the law and lacking ethics.

    They never disappoint my expectations :-(

    Astonishly I find most ZDNET bloggers treat the same companies with a degree of respect.

    I treat both the aforementioned with contempt.
    jacksonjohn
    • But I want it!

      It's interesting that you find it "accurate" to classify them as being on the wrong side of the law when there is no allegation from anywhere that they have failed to abide by the law in any respect. You apparently believe for some odd reason that the law -should- take more money from them. But it doesn't. And until the law changes, your gripe is with your politicians, not the companies.

      Here's what the politicians do: first they tell people that "rich corporations aren't paying their fair share." Then, because they are not stupid and they do not want every business in the land moving to Ireland, they don't actually raise taxes on the corporations. The press, being in the pocket of politicians, covers the speeches about "fair share," but never tells you what happened afterwards. This way, people think the politicians are out there Doing Good, but the politicians don't have to drive employers out of the country en masse, like France is about to do.

      Guess what? Come next election, the politicians will once again be squawking about "rich corporations not paying their fair share." Do us all a favor: stop falling for it.
      Robert Hahn
    • Did Google break any tax laws?

      If not, then how can they be on the wrong side of the law? Do you try to take advantage of every tax deduction you can so as to minimize your tax bill? If you do, are you lacking in ethics? Or is it only a problem if the tax payer has more money than YOU think they should have? Hmmm. Is that unethical? You deciding who deserves what and how much?
      baggins_z
  • Bravo Google

    One way of responding to this news is to rant and rail about a company doing well and operating lawfully from a position of misconceived entitlement. The other - correct - response is to ask why the British corporate taxation environment is so bad that large international corporates avoid registering in the UK?

    The free market has driven Google's response but the bloated state and its greedy dependants just don't get it.
    TheUtarEfson
  • Did Google do anything illegal?

    If not, if they are obeying all UK tax laws, then what is your problem? Oh. Wait. I know: envy.
    baggins_z
  • My sentiment as well...

    I'm sure we'll hear the inevitable "well, even if it's not illegal, it is immoral" from those who think that Google is doing evil by taking advantage of the tax laws in the UK (and the US, I'm sure they pay a pittance in taxes compared to the average joe, percentage-wise).

    Of course, I'm sure that such people don't have RRSPs, Tax-Free Savings Accounts, and don't write off interest on their mortgage, where applicable.

    Honestly, look in your own backyard - this is one of the rare occasions where people can actually *DO* something about this. Unfortunately, the first step is making the decision to elect a government that is going to close these loopholes and force corporations to pay the taxes at an "ethical" rate (whatever that might mean, I guess). The second step is reaping what you sow. If it means corporations are going to pack up and go elsewhere due to stricter tax laws, well so be it. They're "unethical" anyway, so good riddance!
    daftkey
  • Google evaded more tax than that

    They straight out evaded £1billion by basically charging themselves 1bill for admin fees from their Bermuda company, coincidence that bermuda has around 5% corporate tax!!!!
    danjames2012
    • If the deduction is legal, they

      didn't evade anything. They took advantage of legal tax deductions. Just like you do when you deduct the mortgage on your house or sign up for pre-tax deductions into your health insurance premium or 401K.
      baggins_z
  • what a lie

    a Google spokesperson told ZDNet. "We make a big contribution to the UK economy by employing over a thousand people, helping hundreds of thousands of businesses to grow online and investing millions supporting new tech businesses in East London."

    - What a lie !!!, google has killed so many small business, because of the 'free' 'open' source model to line its pockets with cash...
    owllnet
    • Hallow claim

      “what a lie” Where is the proof to your claim?
      RickLively
  • lies, damn lies and accounting....

    We could pay more, but it would be very hard to say to our shareholders 'we feel very sorry for these British people, so we're going to pay millions of dollars in extra taxes that we're not required to do'" Schmidt said

    Its easy to justify it to the shareholders, just quote your mission statement: "don't be evil".

    Paying yourself a $1bn 'licence fee' just to make the accounts look like you made no profits isn't exactly angelic. And it isn't just the UK this applies to, how little did they pay in the US?
    gbjbaanb2
    • Accounting...

      "Paying yourself a $1bn 'licence fee' just to make the accounts look like you made no profits isn't exactly angelic. And it isn't just the UK this applies to, how little did they pay in the US?"

      True, but that $1bn in licensing fees also has to be accounted for as revenue in the Bermuda (or wherever) subsidiary, and that revenue is taxed. In this case, the good ol' Bermuda government gets to enjoy a cool $50 Million in tax dollars for being a nice friendly tax haven for foreign corporations. Not that it does the US or UK any good.
      daftkey
  • Go Google

    As long as any company, corporation comply with the tax rules in the County in which they operate - then that should be good enough for all concerned. If Google want to put something more into the UK, many Towns such as Tavistock would love some Google Superfast.
    Tavistock Superfast Broadband
  • Did something chang while I wasn't looking?

    Last time I looked, UK companies paid tax on their profits (as adjusted for corporation tax), and not on their revenues, but you IT journalists know everything, so what do I know?
    RMarkWilliams