Google doubles tax payments overseas last year

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The Independent Online

Google doubled the amount of tax it paid outside America last year, in the wake of a growing furore about its offshore tax avoidance.

The internet giant paid $771m (£463m) in non-US corporation tax on foreign profits of $8.67bn – equivalent to a rate of 8.9 per cent, which is low compared to typical UK companies.

However, that was more than double a year earlier, when Google paid $358m in overseas tax or 4.4 per cent on profits of $8.08bn. Google's foreign tax rate was even lower, at 3.2 per cent, in 2011.

Its annual report did not explain why its foreign tax bill increased or give a breakdown country by country.

Google has been under pressure to pay more tax after the Commons Public Accounts Committee's chairman Margaret Hodge claimed it was "evil" for paying so little corporation tax in Britain, which is its biggest market after America.

The search giant's most recent annual UK corporation tax bill was only £11.2m, despite British turnover running at £3.5bn a year, or 10 per cent of its worldwide revenues.

The web giant legally avoids tax by choosing to process virtually all its non-US sales offshore in Ireland and then funnelling the profits to tax havens such as Bermuda.

France hit Google with a reported €1bn (£822m) claim for tax last month and President François Hollande said on a visit to America this week that it was "not acceptable" for tech giants to shift profits offshore.

Google has amassed an enormous $33.6bn cash pile overseas.

The owner of YouTube and the Android mobile operating system pays more tax in America, as it does not funnel those revenues offshore. Last year's bill for US federal and state taxes was $1.96bn on domestic profits of $5.83bn – a rate of around 33.7 per cent.

However, its low overseas tax bill and the benefit of deferred taxes cut Google's overall rate to 15.7 per cent. Group profits were $12.92bn on sales of $59.83bn.

Amazon, Facebook and Apple have also come under fire over offshore tax avoidance, as UK companies such as John Lewis and Sainsbury's say they are trading at a significant disadvantage. Corporation tax in the UK is 23 per cent.

Google, with a stock market value of $400bn, recently overtook Exxon to become the world's second most valuable listed company, behind Apple.