Google’s tax bill shoots up

Google said its overseas tax bill rose sharply in 2013, while sales in Britain, its biggest foreign market, hit a record $5.64 billion.

Google said in its 10-K annual report filed on Wednesday that its overseas tax charge, including deferred taxes, was $743 million in 2013.

While this was up from $432 million for 2012, its tax rate on foreign earnings was just 8.6 percent in 2013 — around a third the headline rate in its main non-U.S. markets.

A spokesman declined comment but Google previously said it complies with the tax rules of all the countries in which it operates.

Google earned 60 percent of its profits outside the United States last year, even though foreign sales were just 55 percent of revenues.

Britain is the only market for which Google breaks out separate sales figures. In recent years the discrepancy between the company’s high UK revenues and low tax bill have prompted criticism from politicians.

The Mountain View, California-based company reduces its non-U.S. tax bill by having customers across Europe transact directly with an Irish subsidiary which minimizes its taxable profit by paying royalty fees to an affiliate in Bermuda, where there is no corporate income tax.

However, in recent years Google’s effective tax rate on non-U.S. earnings has inched up.

Last year’s 8.6 percent rate was up from 5.3 percent in 2012. In the previous four years, the rate oscillated between 2 and 3 percent.

Google declined to say why its tax rate was rising outside the United States but the company’s increasing sales in emerging markets could be a factor.

Nikesh Arora, Google’s president for Global Sales Operations said last month the group enjoyed “particularly strong growth in Asia Pacific” last year.

Tax campaigner John Christensen of the Tax Justice Network, Pacific noted that tax authorities in some Asian countries have a tougher reputation in relation to tax avoidance than European countries.

Google publishes its British tax bill in a separate UK filing later in the year. In 2012, the company had a tax bill of 35 million pounds ($55 million), including a 24 million charge in relation to previous years, on sales of $4.9 billion to British customers.

Google’s global revenue growth slowed last year, to 19 percent from 32 percent in 2012. The 16 percent rise in the company’s UK sales compares to 20 percent growth in 2012 and 22 percent in 2011.

More on Google

Google nailed over data collection

Google looking at robots next?

Google gets greener with solar power investment

Google wins victory in book copying case

Must Read

Partner Content

Show comments

Trending Now

Follow Us

Google’s tax bill shoots up