US internet and search giant Google, Inc (NASDAQ:GOOG) filtered USD $9.8 billion of the company’s revenues from international subsidiaries into Bermudalast year to avoid taxes. At around 80% of Google’s pre-tax profits the amount being shuffled around to avoid taxes has nearly doubled in the last three years, according to Bloomberg.
Documents filed last month in theNetherlandsshow thatBritainis Google’s second biggest market generating 11% of its sales, or USD $4.1 billion last year. Yet the company paid only USD $9.6 million in corporate taxes. In the end despite generating most of its revenues in high-tax jurisdictions inEurope, Google paid a rate of just 3.2% on its overseas earnings.
Some analysts believe that the increase in Google’s revenues routed to Bermuda to minimize or avoid taxes may further stoke outrage spreading across Europe and in theUSover corporate tax dodging. Governments inFrance, theUK,ItalyandAustraliahave all begun investigations concerning Google’s tax practices.
As recently as last week EU member states were advised to consider adopting more strict anti-abuse rules and to create blacklists of tax havens by the European Commission. Tax evasion and avoidance, costs the EU as much as 1 trillion euros (USD $1.3 trillion) a year, are “scandalous” and “an attack on the fundamental principle of fairness,” Algirdas Semeta, the EC’s commissioner for taxation, said at a press conference in Brussels.
Google reportedly uses complex tax schemes called the ‘Double Irish’ and ‘Dutch Sandwich’, which take large royalty payments from international subsidiaries and pay tax in low rate regimes.
The tax arrangements add fuel to accusations made by British MPs that Google and other firms including Starbucks and Amazon, have been “immorally” minimizing its tax bills.
Google has declined to comment thus far. However two weeks ago Google’sUKboss Matt Brittin said MPs were blaming companies for a system that they had designed. “Google plays by the rules set by politicians,” he said. “The only people who really have choices are politicians who set the tax rates.”
Stock Price Performance: (30-Day) Between November 9, 2012 and December 10, 2012, Google, Inc (NASDAQ:GOOG) stock price increased USD $21.18 (+3.19%) from USD $663.03 to $684.21.