Google paid a paltry £11.6m in tax in the UK on declared profits of £36.8m in 2012, despite claims it should have paid a further £150m.
The latest chapter in the long-running dispute between many multinational companies including Amazon and Starbucks sees Google paying what many consider to be far too little tax.
UK MPs have in the past accused Google of avoiding tax in the UK with clever accounting through its business in Ireland. Google says its UK arm, which is based in London, is used for marketing services for the firm's offices in Ireland.
However, rather than the £506m turnover Google is said to have generated in the UK in 2012, Reuters has now alleged that a further $4.9bn (£3bn) of revenue came from UK customers. But those UK and other non-US customers are billed by Dublin-based Google Ireland Ltd, thereby avoiding UK taxes. Most of the Irish income is then sent to affiliates in Bermuda in the form of intellectual property licensing fees.
Richard Murphy of Tax Research UK estimates that Google reduced its 2012 UK tax bill by around £150m through its Ireland offshoot.
A Google spokesperson quoted by The Telegraph said the firm's practices were all above board. "Like most mulitnationals we pay the bulk of our £1.2bn corporate tax bill where our business originated, in our case the US," he stated. "That's a rate of more than 19 percent, roughly what a UK-based company would pay."
V3 asked Google for comment too but had received no reply at the time of publication.
In June MPs accused Google's tax-paying methods as "deeply unconvincing", saying that the existence of Google Ireland "has no purpose other than to avoid UK corporation tax". Google's executive chairman Eric Schmidt said in May that he was "perplexed" by the accusations, saying that it is up to UK lawmakers to change the rules on tax.
The leaders of G8 countries promised in June to change the law to ensure multinational companies pay their fair share of tax.
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