Global tech major Google avoided paying a whopping $3.6 billion from its tax bill using a structure known as Double Irish and Dutch Sandwich.
Global tech major Google avoided paying a whopping $3.6 billion from its tax bill using a structure known as Double Irish and Dutch Sandwich. This report was published in Bloomberg, and it said that Google moved $15.5 billion to a Bermuda shell company. According to the report, this was revealed by regulatory filings in Netherlands. There are some loopholes among the US corporations where companies as big as Google are able to move the earnings through subsidiaries in countries which have a low tax rate (Ireland & Netherland) and then they can also move it to tax havens like Bermuda & the Cayman Islands.
Bloomberg reported that Google shifted profits to its subsidiary Google Netherlands Holdings BV, and then Bermuda mailbox. The total amount in 2015 was 40 percent greater than that of 2014. This is based on a report by Dutch newspaper Het Financieele Dagblad which published about the filings made by Google in Dutch Chamber of Commerce. According to the Bloomberg report, Alphabet which owns Google uses a subsidiary in Netherlands, which has no employees and has been using it since 2004. This type of tax structure is known as Double Irish or Dutch Sandwich. Technically, Google seems to be in compliance with tax laws in the countries it uses to lower the tax bills.
Google Ireland Limited, which is a collector of the company’s advertising revenues, internationally, and around 12 billion euros came from here, which was funnelled through the Dutch company, while the remaining came from a subsidiary in Singapore that serves a similar role, Bloomberg reported. Bermuda has no corporate tax, where the money is finally transferred to. According to Alphabet’s SEC filings Google has profited a whopping $58.3 billion earned through avoiding taxes in the US, Bloomberg reported. Ireland had stopped just a method this year, but companies who have been using this, are allowed at least till 2020.
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It is unclear if this method will have any legal issues, but Google has been mired is some other controversies in recent times. A Google employee had sued the company for conducting ‘spying program’ and for being too confidential. Recently, in a technology summit with the US President -elect Donald Trump and many other leaders of top companies, the issue of corporate laws in the US was also reportedly raised. It remains to be seen what Trump can do to make these major companies remain and pay taxes in the same country.