Apple has caught a ton of flack for keeping profits overseas to avoid paying hefty taxes on their earnings but many may be surprised to learn that they aren’t the only big tech brand engaging in such activity. Just last year, Google avoided paying roughly $2 billion in income tax by moving close to $10 billion in revenue to a shell company in Bermuda.
If you weren’t already aware, Bermuda does not have a corporate income tax. By moving money into the shell company, the search giant effectively reduced their tax rate by almost 50 percent. It’s all perfectly legal although it likely won’t sit well with those in the US and Europe that are opposed to corporate tax dodging.
Information on the redirection of funds was first made available in a filing on November 21 in the Netherlands. Google is already under investigation in a number of countries including Australia, France, Italy and the UK for similar tax avoidance practices.
Just last week, the European Commission told member states to come up with a list of tax havens for blacklisting purposes. According to the executive body, tax evasion or rerouting money to tax-free regions cost the European Union roughly $1.3 trillion each year. The EC feels the tactics are an attack on the fundamental principle of fairness and scandalous.
For their part, the search giant says they comply with all tax regulations and that their presence in various European countries helps the local economy. They also employ more than 2,000 Europeans and help thousands of online businesses prosper. That’s all in addition to investing millions in new tech businesses in East London, the company said in a statement.
Given all that Google and other large companies do for local communities, do you think they should be given any special tax breaks?