‘Do no evil’ says the tech giant but 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. Google’s 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, and that includes tax paid on its activities in the UK, which is its biggest overseas market.
As the Sunday Times reported in 2009: ‘Google avoids paying more than £100m a year in UK tax despite pulling in annual revenues of more than £1.25 billion. Even though the web search engine operates as Google UK Ltd in London, British firms which advertise with it pay their subscriptions to a subsidiary based in Ireland, where corporation tax is far lower than in the UK. This structure, condemned this weekend as “unfair” and “unacceptable”, allowed Google legally to avoid paying £110m of UK tax in 2007, according to research by an expert on corporate tax avoidance.’
It may not be evil, but it’s a mighty big loss to the UK Exchequer.
- Image: Andrew Aitchison