Google's STG130 million ($A264.60 million) deal with the British taxman is "derisory" and must be investigated by the public spending watchdog, Labour has said.
The internet giant reached the agreement with HM Revenue and Customs over taxes it has owed since 2005 and will also start to pay tax "based on revenue from UK-based advertisers, which reflects the size and scope of our UK business".
But John McDonnell said the public would be "sceptical" about the "derisory" settlement and called for the National Audit Office to launch an inquiry into the deal.
The shadow chancellor said he would be demanding details of the deal from Chancellor George Osborne in parliament on Monday and criticised the HMRC for agreeing to recoup a "relatively small amount".
"It looks to me from all the independent analysis that this is relatively trivial in comparison with what should have been paid," he told BBC Radio 4's Today program.
The move comes after years of criticism of Google and other multinational firms over their tax arrangement in the UK and across Europe.
Meg Hillier, who chairs the Common's Public Accounts Committee (PAC) will call Google and HMRC figures before MPs to explain the deal, which she said showed the taxman "admitting it pulled in too little tax from Google for nine out of 10 years".
"The news that Google is paying 10 years' back tax vindicates the Public Accounts Committee's vigorous pursuit of international companies that were running rings around tax officials," the Labour MP said.
"We were shocked to learn of workarounds of the tax system that were considered normal behaviour by big corporations but which appalled the individual taxpayer.
"HMRC now needs to assure taxpayers that it will keep up the pressure to tackle whatever the next emerging issue is in real time, rather than years later. It is effectively admitting it pulled in too little tax from Google for nine out of 10 years."
In March's Budget the Chancellor announced the introduction in April of a so-called "Google tax" targeting firms that move their profits overseas.
The "diverted profits tax" is designed to discourage large companies from taking earnings out of the UK to avoid tax.
Mr Osborne described the payments as a "victory" for action on tax avoidance.
A Google spokeswoman said: "We have agreed with HMRC a new approach for our UK taxes and will pay STG130 million, covering taxes since 2005.
"We will now pay tax based on revenue from UK-based advertisers, which reflects the size and scope of our UK business.
"The way multinational companies are taxed has been debated for many years and the international tax system is changing as a result. This settlement reflects that shift and is in line with recent OECD guidance."
Share
