Google share price: UK sales reach record $5.6 billion

on Feb 14, 2014
Updated: Jun 1, 2022

Are you looking for signals & alerts from pro-traders? Sign-up to Invezz Signals™ for FREE. Takes 2 mins., Friday, February 14: Google Inc’s (NASDAQ:GOOG) sales in the UK reached record levels in 2013, the owner of the world’s largest search engine revealed in a Wednesday statutory filing to the US Securities and Exchange Commission. Sales growth rate, however, was the lowest in three years.

The filing also showed that the company’s overseas tax bill nearly doubled in 2013 from a year earlier. This does not include the UK tax figures, which Google will publish in a separate UK filing later in the year.
The company has faced a lot of criticism in recent years over its overseas tax practices, including accusations of tax avoidance. In the UK, its relatively low tax bill in 2012 raised questions from Members of Parliament.

In yesterday’s trading Google shares closed 1.1 percent higher at $1,199.90. The company’s stock has gained more than seven percent so far this year.
**Record sales, lower growth**
Google’s UK sales rose to $5.64 billion (£3.38 billion) last year, up 16 percent from a year earlier, a 10-K annual report to the SEC showed. The result indicates a slowdown in sales growth from 20 percent in 2012 and 22 percent in 2011. The result mirrors Google’s performance in its home market, the United States, where its sales growth also slowed last year to 14 percent from 34 percent in 2012.

The UK, which is Google’s largest overseas market, is the only territory outside the US for which the company reports separate sales figures. Overall, 60 percent of the company’s profits last year were generated outside the US, with foreign sales accounting for 55 percent of total revenue. Sales growth in the Asia Pacific region was “particularly strong”, Google’s president for Global Sales Operation Nikesh Arora said last month.

**Higher tax bill**
Growing sales in emerging markets, especially in Asia, is likely one of the factors behind a considerable hike in Google’s overseas tax bill last year. Tax campaigner John Christensen of the Tax Justice Network noted that tax authorities in some Asian countries have a tougher reputation in relation to tax avoidance than those in Europe.

In 2013 the company’s foreign tax charge, including deferred taxes, was $743 million, up from $432 million for 2012. Its tax rate on foreign earnings last year was 8.6 per cent against 5.3 percent in 2012.
While the tax rate has increased significantly, it is still considerably lower than in the UK, where corporation tax is 23 percent. Google reduces its non-US tax bill by having customers in Europe conduct transactions with an Irish subsidiary that minimises taxable profit by paying royalty fees to an affiliate in Bermuda, where there is no corporate income tax.
The company’s UK tax bill in 2012 was £35 million, including a £24 million charge in relation to previous years, on sales of $4.9 billion. This prompted Margaret Hodge, chair of the Commons Public Accounts Committee, to say last year that the company is “evil” for paying so little corporation tax in Britain.
**As of yesterday’s US close buy Google shares at $1,199.90**
**As of yesterday’s US close sell Google shares at $1,199.90**
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