Bermuda shelter helps Google duck $2bn tax bill
Google halved its tax bill last year and avoided $US2 billion ($A1.9 billion) of global income levies by funnelling most of its profits through Bermuda, regulatory filings show.
The American internet giant, whose company motto is ‘‘Don’t be Evil’’, swept $US9.8 billion of revenues from international subsidiaries into Bermuda last year.
The figure, which equates to about 80 per cent of its total pre-tax profits, is nearly twice as big as it was three years ago, according to Bloomberg.
The documents, filed last month in the Netherlands, show that Britain is Google’s second biggest market, generating 11 per cent of its sales, or $US4.1 billion last year. But the company paid just £6 million ($A9 million) in corporation tax.
Overall, Google paid a rate of 3.2 per cent on its overseas earnings, despite generating most of its revenues in high-tax jurisdictions in Europe.
The company reportedly uses complex tax schemes called the Double Irish and Dutch Sandwich that 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 companies including Starbucks and Amazon, have been ‘‘immorally’’ minimising tax bills.
Google declined to comment. But two weeks ago Matt Brittin, Google’s UK boss, 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.’’
Last week, Starbucks caved in to public pressure and promised to pay £20 million to the British Treasury over the next two years. However, the move has triggered further criticism over the idea of ‘‘optional’’ tax payments.
British Chancellor George Osborne has pledged to give the Organisation for Economic Co-operation and Development ‘‘more resources’’ to fund a clampdown to ensure global companies pay their ‘‘proper share of taxes.’’
Pascal Saint-Amans, the director of the OECD’s centre for tax policy and administration, said the issue of tax avoidance was now recognised as a ‘‘political concern’’.
At the weekend it emerged that Microsoft pays no British tax on £1.7 billion of online revenues. Although it pays full corporation tax on its other units, the US technology group is understood to be channelling online payments for its Windows 8 operating system and other downloads of software through Luxembourg and Ireland, where corporation tax is lower than in Britain.
As a result, Microsoft’s Irish registered company, Microsoft Ireland Operations Ltd, reported £1.7 billion of revenues from Britain on which the company has paid no British corporation tax.
Microsoft has denied any wrongdoing in the US and said that it complied with tax laws.