Google will pay £130m in back taxes after striking a deal with UK tax authority HMRC.
The online search and advertising giant said it had agreed a “new approach” to cover taxes since 2005.
The House of Commons Public Accounts Committee had previously accused the company of “aggressive tax avoidance,” adding it was not paying “its fair share of tax” in the UK.
Matt Brittin, head of Google Europe, added: “The way multinational companies are taxed has been debated for many years and the international tax system is changing as a result.”
The tax agreement follows a six year inquiry by HMRC, which has been examining low level of taxes paid by foreign-based multinational companies that operate in the UK.
Google paid just £20.4m in taxes in the UK in 2013, despite its UK sales having a value of that year £3.8bn.
A spokesperson for HMRC said: “The successful conclusion of HMRC enquiries has secured a substantial result, which means that Google will pay the full tax due in law on profits that belong in the UK. Multinational companies must pay the tax that is due and we do not accept less.
“HMRC enforces the tax rules impartially, irrespective of the size or structure of the business. Last year our compliance activities yielded £26bn in extra tax, including £7.3bn from the largest and most complex businesses”
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