Sikka, who is undertaking a review of HMRC for Labour, added that he believed the deal raised “more questions than answers”. He said: “We need to know how they came to this figure of £130m. The UK corporation tax rate in 2005 was 30% and is now 20%.
“We could do lots of averages but let us be generous and assume that the average rate for the period is 25%. That would mean that on its estimated £7.2bn UK profit Google should have paid corporation tax of £1.8bn. At best, it paid about £200m. That is an estimated shortfall of £1.6bn – lots of nurses and teachers, and probably bigger than the yield from the bedroom tax.
But Google didn’t have a £7.2 billion UK profit. That’s actually the point.
Google Eire did.