Google has agreed to pay £130m in owed taxes following a six-year inquiry by HM Revenue & Customs.
The BBC reports the payment relates to money owed since 2005. Google says the deal will also see the online search firm pay more in UK tax in the future.
Google paid £20.4m in UK taxes in 2013, despite British sales worth £3.8bn.
Chancellor George Osborne said the agreement was “a real vindication of this Government’s approach”, but added details of the deal were confidential.
Shadow chancellor John McDonnell told BBC Radio 4’s Today programme the agreement was akin to a “sweetheart deal.”
He said: “HMRC seems to have settled for a relatively small amount in comparison with the overall profits that are made by the company in this country. And some of the independent analysts have argued that it should be at least 10 times this amount.”
The Tax Justice Network claims Google should be paying over £200m every year in corporation tax.
Google Europe head Matt Brittin told the BBC: “The rules are changing internationally and the UK Government is taking the lead in applying those rules so we’ll be changing what we are doing here. We want to ensure that we pay the right amount of tax.”
An HMRC spokesman said: “The successful conclusion of HMRC enquiries has secured a substantial result, which means that Google will pay the full tax due in law on profits that belong in the UK.
“Multinational companies must pay the tax that is due and we do not accept less.”