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The European Commission has said it could investigate the UK's £130 million tax settlement with Google.

European Competition Commissioner Margrethe Vestager said she would not say whether or not the settlement amounts to a so-called 'sweetheart deal', but that she would be willing to investigate the deal after receiving a letter from SNP economic spokesperson Stewart Hosie.

Speaking to the BBC, Ms Vestager said: "If we find that there is something to be concerned about if someone writes to us and says, well, this is maybe not as it should be then we will take a look.

HM Revenue & Customs (HMRC) agreed a £130 million tax settlement with Google last week. Critics have pointed out that given Google's profits of around £7.2bn since 2005, the deal means Google's corporation tax has been 3%, compared with the 20% it was supposed to pay for much of that time.

HMRC says that the amount was "full tax due in law". And Google has now defended itself in the Financial Times.

Peter Barron, Google's chief of European public affairs, said: "After a six-year audit we are paying the full amount of tax that HM Revenue and Customs agrees we should pay... Governments make tax law and tax authorities independently enforce the law, and Google complies with the law."

In his letter, Mr Barron added: "Corporation tax is paid on profits, not revenue, and is collected where the economic activity that generates those profits takes place.

"As a US company, we pay the bulk of our corporate tax in the US: $3.3bn in the last reported year.

"What should Google pay in the UK? We pay tax based on the value added by the economic activity of our staff here, at the current standard rate: 20%".

Global cooperation

The suggestion that a European Commission investigation could take place comes as 31 OECD nations signed a deal designed to tackle corporation tax avoidance.

Rather than tackling the problem with laws, the deal will see tax authorities share information on profits earned and tax paid by multinational companies in each respective country.

Ms Vestager said: "Hopefully, we will end up in a situation where companies pay taxes in the countries where they also make their profits and these new proposals will take us another step down that road."