Every year when Google files its documents with Companies House, a fresh wave of outrage follows at the small size of its tax bill. The UK is Google’s second largest market, with $4bn in sales coming via UK customers last year according to US filings. However, Google UK posted only £395m in revenue and paid £6m in UK taxes in 2011.
In a completely legal tax structure, if you buy an ad from Google, the contract isn’t with the UK office, but with Google Ireland – which has a corporation tax rate of 12.5% compared to the UK’s, which recently fell to 24%.
That means Google UK posts a relatively small profit, and often a loss, keeping its tax bill down. Google UK has failed to post any profit in the past three years, losing £24m in 2011, £27m in 2010 and £9.7m in 2009. In 2011, its tax bill was less than £1m, and in 2009 it was £2.9m.