The most recent financial figures released by Google show that they are paying more tax in the UK than in the previous tax year. But is it a true representation of their British income?
Google’s work in the UK
Google’s financial year ending in June 2018, shows that they paid 38% more UK tax than the one before. HMRC received a total of £65.3m in corporation tax from Google.
Google’s work in the UK is defined as being to provide services for the other parts of the company. None of their huge advertising revenue is done through the UK, but is booked in Ireland. According to their financial report:
- Revenue is up 11% from £1.27bn to £1.41bn for the year
- They have 3,658 employees in the UK: 1,783 in R&D, 400 management and administration, 1,400 marketing
- £829.1m on UK employees; wages of £388.1m, social security payments of £80.3m
- £426m of revenue is “associated with R&D activity”
- The previous financial year’s tax bill was £47.4m
The fact that Google are paying a higher amount in tax is obviously a positive for the Treasury. But is it a fair amount yet?
How much UK Corporation Tax should Google be paying?
The Tax Justice Network, commissioned by the Daily Mirror, also had a look at Google’s financials. Google paid £67m in Corporation Tax for the financial year ending June 2018. The Tax Justice Network’s analysis found that, if all the advertising sales were booked in the UK rather than Ireland, Google’s UK turnover would be £9.7billion. This is £8.3billion more than they currently declare and would result in an additional Corporation Tax payment of £1.5billion.
As reported by the Daily Mirror, Tax Justice Network’s chief executive Alex Cobham said: “This should be in the mind of HMRC and the Chancellor on the continuing weaknesses of the UK tax system, ¬especially when needless austerity has led to the shocking phenomenon of falling life expectancy in lower- income households.”
What does Google have to say about this?
Google did issue a statement, saying: “As an international business, we pay the majority of our taxes in our home country, as well as all the taxes due in the UK.”
So perhaps this increased tax bill is just a step in the right direction for Google towards actually paying a fair UK tax bill.