[credit provider=”flickr/ehud” url=”http://www.flickr.com/photos/ehud/17451790/”]
Michael Winter, USA TODAYBy funelling nearly $10 billion in revenue into a Bermuda shell company last year, Goggle dodged about $2 billion in income taxes worldwide, Bloomberg News reports, citing financial records.
The off-shore tax shelter — legal in the United States and elsewhere — cut Google’s tax rate nearly in half, Bloomberg says. Bermuda has no corporate income tax. Bloomberg says the amount saved was about 80(per cent) of the company’s pre-tax profit.
In a statement from corporate headquarters in Mountain View, Calif., Google said that it complies with all tax rules. The company also said its European investments help those countries’ economies and businesses, and provide thousands of jobs.
Last week, Reuters reported how Amazon has avoided income taxes — $1.5 billion, the IRS claims — by channeling sales through Luxembourg. In the course of accumulating $2 billion to finance expansion, the Seattle-based retailing behemoth has also evaded paying hundreds of millions of dollars to European countries.
The European Commission, the executive body of the European Union, estimates the EU loses around 1 trillion euros — about $1.3 trillion — each year to tax evasion and avoidance.
Last week, the commission announced an “action plan” that advised member states to “protect their tax bases and recapture billions of euros legitimately due.” Recommended measures included drawing up black lists of tax havens and legislation curbing tax abuses.
In November, angry British lawmakers accused Google, Amazon, Starbucks and other multinationals of engaging in “aggressive” tax avoidance and called for a worldwide crackdown.
Two years ago, Bloomberg reported that Google used two overseas shelters to avoid billions in income taxes. The company did so by transferring royalty payments from its Irish and Dutch subsidiaries to a Bermuda unit, which was simply headquartered in a local law firm.
Bloomberg writes that last year Google “reported a tax rate of just 3.2(per cent) on the profit it said was earned overseas, even as most of its foreign sales were in European countries with corporate income tax rates ranging from 26(per cent) to 34(per cent).”