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Google Inc. cut its taxes by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda.
Googles income shifting -- involving strategies known to lawyers as the Double Irish and the Dutch Sandwich -- helped reduce its overseas tax rate to 2.4 percent, the lowest of the top five U.S. technology companies by market capitalization, according to regulatory filings in six countries.
Its remarkable that Googles effective rate is that low, said Martin A. Sullivan, a tax economist who formerly worked for the U.S. Treasury Department. We know this company operates throughout the world mostly in high-tax countries where the average corporate rate is well over 20 percent.
The U.S. corporate income-tax rate is 35 percent. In the U.K., Googles second-biggest market by revenue, its 28 percent.
Google, the owner of the worlds most popular search engine, uses a strategy that has gained favor among such companies as Facebook Inc. and Microsoft Corp. The method takes advantage of Irish tax law to legally shuttle profits into and out of subsidiaries there, largely escaping the countrys 12.5 percent income tax. (See an interactive graphic on Googles tax strategy here.)
The earnings wind up in island havens that levy no corporate income taxes at all. Companies that use the Double Irish arrangement avoid taxes at home and abroad as the U.S. government struggles to close a projected $1.4 trillion budget gap and European Union countries face a collective projected deficit of 868 billion euros.
Countless Companies
Google, the third-largest U.S. technology company by market capitalization, hasnt been accused of breaking tax laws. Googles practices are very similar to those at countless other global companies operating across a wide range of industries, said Jane Penner, a spokeswoman for the Mountain View, California-based company. Penner declined to address the particulars of its tax strategies.
Facebook, the worlds biggest social network, is preparing a structure similar to Googles that will send earnings from Ireland to the Cayman Islands, according to the companys filings in Ireland and the Caymans and to a person familiar with its plans. A spokesman for the Palo Alto, California-based company declined to comment.
http://www.bloomberg.com/news/2010-...illion-u-s-revenue-lost-to-tax-loopholes.html
Googles income shifting -- involving strategies known to lawyers as the Double Irish and the Dutch Sandwich -- helped reduce its overseas tax rate to 2.4 percent, the lowest of the top five U.S. technology companies by market capitalization, according to regulatory filings in six countries.
Its remarkable that Googles effective rate is that low, said Martin A. Sullivan, a tax economist who formerly worked for the U.S. Treasury Department. We know this company operates throughout the world mostly in high-tax countries where the average corporate rate is well over 20 percent.
The U.S. corporate income-tax rate is 35 percent. In the U.K., Googles second-biggest market by revenue, its 28 percent.
Google, the owner of the worlds most popular search engine, uses a strategy that has gained favor among such companies as Facebook Inc. and Microsoft Corp. The method takes advantage of Irish tax law to legally shuttle profits into and out of subsidiaries there, largely escaping the countrys 12.5 percent income tax. (See an interactive graphic on Googles tax strategy here.)
The earnings wind up in island havens that levy no corporate income taxes at all. Companies that use the Double Irish arrangement avoid taxes at home and abroad as the U.S. government struggles to close a projected $1.4 trillion budget gap and European Union countries face a collective projected deficit of 868 billion euros.
Countless Companies
Google, the third-largest U.S. technology company by market capitalization, hasnt been accused of breaking tax laws. Googles practices are very similar to those at countless other global companies operating across a wide range of industries, said Jane Penner, a spokeswoman for the Mountain View, California-based company. Penner declined to address the particulars of its tax strategies.
Facebook, the worlds biggest social network, is preparing a structure similar to Googles that will send earnings from Ireland to the Cayman Islands, according to the companys filings in Ireland and the Caymans and to a person familiar with its plans. A spokesman for the Palo Alto, California-based company declined to comment.
http://www.bloomberg.com/news/2010-...illion-u-s-revenue-lost-to-tax-loopholes.html
