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Today's Top News
Google Exploits Tax Loophole that Costs US $60 Billion Annually
Report: Google's Income Shifting Yields Low 2.4% Tax Rate
Internet search giant Google Inc. managed to cut its taxes by more than $3 billion last year using a technique that shifted most of its profits through overseas routes, Bloomberg News reported Thursday.
The report said Google shifted most of its profits through Ireland and the Netherlands to Bermuda, effectively cutting the corporation's overseas tax rate to just 2.4 percent, "the lowest of the top five U.S. technology companies by market capitalization," Bloomberg News said.
Martin A. Sullivan, a former tax economist for the U.S. Treasury Department, told the financial newswire service it was "remarkable" that Google managed such a low overseas rate, given that "this company operates throughout the world mostly in high-tax countries where the average corporate rate is well over 20 percent."
The United States has one of the highest corporate tax rates in the developed world at 35 percent. In the UK, meanwhile - Google's second-largest market by revenue, Bloomberg said - the corprate tax rate is 28 percent.
Google isn't alone in the practice, said the report. Other technology companies such as Facebook and Microsoft also take advantage of Irish tax laws which allow corporations "to legally shuttle profits into and out of subsidiaries there, largely escaping the country’s 12.5 percent income tax," Bloomberg reported.
The newswire service said Google hasn't been accused of violating tax laws but rather the company was merely taking advantage of loopholes that other corporations also use.
Bloomberg said such "income shifting" costs the U.S. government some $60 billion in tax revenue annually.