The Guardian in the UK is reporting that Google is using “a cross-border network of subsidiary companies to ensure it did not pay a penny in corporation tax on its £1.6bn advertising revenues in Britain.”

The publication says that most of the UK-based revenue is recognized in Ireland where tax rates are lower:

While much of the costs linked to the running of Google’s British operations are recognised for tax purposes in the UK; revenues from customers in Britain, however, are diverted to another Google company in Ireland, where the corporation tax rate is between 10% and 25%. British corporation tax is levied at between 28% and 30%.

Some MPs are upset and have criticized Google accordingly for not “paying its fair share” of taxes in the UK.

While the practice is undoubtedly perfectly legal it may land Google in hot water politically in the future. In the article Google defended its actions, saying that it employed hundreds of people in the UK and made a “substantial contribution” to the economy in this and other ways.