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Google accused of $2bn tax dodge

10 Dec 2012
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Google shifted $9.8bn in revenue to Bermuda in order to avoid paying $2bn in global taxes, according to a report from Bloomberg.

The search giant reportedly used common revenue funnelling techniques to avoid its tax obligations. News of the tax dodging comes as governments from around the world begin decrying corporate tax avoidance.

"When corporations skip out on their taxes, the rest of us are left to pick up their tab," said tax and budget advocate for the US Public Interest Research Group (PIRG) Dan Smith in a statement on corporate tax dodging.

"Right now, this kind of tax dodging is perfectly legal, but it's not fair and it's time to put an end to it."

Google used tax avoidance techniques known as the "Double Irish" and the "Dutch Sandwich" to avoid its tax bills. The techniques involve sending profits through an Irish subsidiary to a Dutch firm which sends the revenue to another Irish firm headquartered in a tax heaven like Bermuda.

The legal techniques are used to reduce corporate tax burden through a number of corporate loopholes found in both Ireland and the Netherlands.

According to Bloomberg, Google used the tax avoidance techniques to cut its overall tax bill in half. While tax avoidance is a common practice for corporations, Google has continued to be a prime target for tax dodging complaints.

Corporate taxation has been a big issue for politicians this year. In September, the US Senate grilled HP and Microsoft on allegations of tax avoidance. Google and Amazon were also recently called out for not paying enough tax by members of the UK Parliament.

Google declined to comment on the reports.

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James Dohnert
About

James is a freelance writer and editor. In addition to ClickZ, his work has appeared in publications like V3, The Commonwealth Club, CachedTech.com, and Shonen Jump magazine. He studied Journalism at Weber State University.

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