Google has agreed to pay £130m in corporation tax, following a six-year enquiry by HMRC into their tax affairs.
This measly payment is a tiny fraction of the £3-4 billion they earn every year in the UK. Of course, corporation tax is paid on profits, not turnover. So they are allowed to deduct their ‘costs’ to reach a net profit. It makes you wonder what those ‘costs’ could be for an internet giant. Raw materials? Probably not. Machinery and equipment? Staffing costs? Whatever they are using as deductions, it comes to a whopping £3-4 billion, or nearly the whole of their turnover. It makes you wonder, with such minimal profits, why they even bother trading in the UK.
It is not clear which period the tax covers, but it is believed it covers an eight-year period, so probably about an extra £20m per year, on average.