Google accused of £450-million tax evasion

Internet giant Google, whose second largest source of revenue outside of the US is the UK, shrewdly managed to dodge paying more than £450 million tax on its £1.6 billion advertising revenues in Britain last year.

Ranked fourth in the 2009 Fortune survey of the World's most admired company and rated as the 2008 World's Most Ethical Company by The Ethisphere Institute, Google booked its expenses in the UK, where corporate taxes are high, while showing its earnings in Ireland, where taxes are low.

Not only it did not pay a penny to the UK Revenue & Customs in 2008 on the £1.6-billion advertising revenues in Britain, but paid a measly £6.7 million in taxes to the Irish government in 2008 although a major chunk of its £5.9 billion European earnings was routed to its European headquarters in Dublin through its Irish subsidiary, Google Ireland Limited.

Accounts filed at the UK Companies House for its UK subsidiary company, Google UK Limited, show the search engine specialist paid just £141,519 in corporation tax in 2008, which was tax on the interest generated by its UK bank deposits but none of its advertising revenues from its UK customers were accounted for in the business.

This is despite Google employing more than 800 staff in London and Manchester and incurring administrative expenses of £177 million in 2008, including a wage bill of £70 million and conveniently reporting a turnover of £150 million and a pretax loss of £26 million.

Google managed to divert all its advertising earnings in the UK to Google Ireland Limited legally, thus avoiding paying the UK government more than £450 million in corporation tax in 2008.