Google has come to a £130 million deal with the taxman to pay money it has billed for the previous 10 years.
The tech giant said it had stretched a pact with Customs and HM Revenue wrapping taxes since 2005.
It means Google will start to pay tax “based on income from UK-based promoters, which imitates the scope and size of our UK business”, the firm said.
The change comes after years of censure of Google and other international businesses over their tax organization across Europe and in the UK.
The chairwoman of the Common’s Public Accounts Committee (PAC), Meg Hillier will call HMRC and Google figures before MPs to clarify the deal, which she said showed HMRC “stating it drew too little tax from Google for 9 out of 10 years”.
“We have settled with HMRC a new approach for our UK taxes and will pay £130 million, covering taxes since 2005.” said a Google spokeswoman.
She added: “The way international firms are taxed has been disputed for many years and the international tax system is altering as a result. This settlement reveals that shift and is in line with fresh OECD guidance.”
The issue of how much UK tax multinational firms like Facebook, Google and Amazon pay in the UK has hit the headlines in current years, with HMRC representing back in October 2013 that it was looking into Google’s accounts.
In March’s Budget Chancellor George Osborne broadcasted the introduction in April of a so-called “Google tax” directing firms that move their profits abroad.
The “diverted profits tax” is designed to dampen huge businesses from taking salaries out of the UK to escape tax.
An HMRC spokesman said: “The successful conclusion of HMRC analyses has held a significant result, which means that Google will pay the full tax due in law on profits that belong in the UK. Multinational companies must pay the tax that is due and we do not consent less.”
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