The Internet search giant only paid a tax rate of 2.6 percent on $8.1 billion in non-U.S. income in 2012, because it channelled almost all of its overseas profits to a subsidiary in Bermuda which levies no corporate income tax. Google claims to follows all they tax rules in every country where it operates. It says that it does not pay much tax in Britain because its profits are not generated by its UK employees.
Google UK pay little tax because they are designated as providers of marketing services to Google Ireland., the Dublin-based subsidiary whose name appears on invoices to most non-U.S. clients. The parliamentary Public Accounts Committee (PAC) heard how Google advertised dozens of jobs for salespeople, despite Brittin telling the committee last year that the company does not pay tax on its UK revenues because it does not conduct sales from British territory.
A PAC report later accused of Google of using "contrived" mechanisms to avoid tax and called on the government to change the rules on taxing multinational companies.