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Google to pay £130 million in back taxes to the UK

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Google has agreed to pay the UK £130 million (roughly $185 million) in back taxes. The deal covers the company for the past decade, and comes after a years-long investigation by the government's tax agency, HMRC, into the search firm's accounting practices in the UK.

The figure applies future tax policies back to Google's earnings since 2005, plus interest. Under the deal, Google is now paying taxes on revenues from advertisers in the UK. Previously, the search company — like many other large multinational firms — was able to avoid taxes on much of that revenue by routing it through countries with low taxes. Companies like Apple and Amazon have been criticized for employing similar legal practices to reduce their tax burden. This system, for instance, allowed Google in 2013 to pay just £20.5 million UK taxes on £3.8 billion in revenue in the country.

Deal settles Google's tax obligations back to 2005

The British treasury has called the deal "the first important victory in the campaign ... to ensure companies pay their fair share of tax on profits made in the UK" as well as "a success for our new tax laws." Not everyone is pleased with the agreement however: opposition chancellor John McDonnell said it looked like a "sweetheart deal," noting that the settlement amount "is relatively trivial in comparison with what should have been paid."

For Google, the HMRC's investigation did not find that the company cheated on its taxes, and, importantly, the UK's so-called "Google Tax" will not be invoked. That means the company won't have to pay any penalties for diverting profits. In addition, according to the Financial Times, Google will retain its "double Irish" accounting policies — at least until Ireland closes that loophole.