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News : US Economy Last Updated: Oct 23, 2010 - 2:59:19 PM


Google saved $3.1bn in taxes in past 3 years using 'Double Irish ' scheme; Google has paid no tax in UK since 2007 - - one of its biggest overseas markets
By Finfacts Team
Oct 22, 2010 - 7:04:19 AM

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Bloomberg reported on Thursday that Google cut its taxes by $3.1bn in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda. It has paid no taxes in the UK since 2007 even though it is one of its biggest overseas markets.

Bloomberg said 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%, the lowest of the top five US technology companies by market capitalization, according to regulatory filings in six countries.

Revenues from the United Kingdom totaled $840m in the third quarter - -  representing 12% of revenues  --  but the US firm paid no corporate taxes in the UK even though it has 850 employed there.

Income from selling advertising on Google's UK website goes straight to its Irish subsidiary.

The London Independent says the latest filing by Google UK at Companies House in London shows that "administrative expenses" rose by £21.6m, eclipsing an increase of £19.8m in revenue and resulting in a loss of £9.7m. The losses were due in part to the increased costs of stock-based compensation, it is understood.

Earnings moved from Ireland and the Netherlands wind up in island havens that levy no corporate income taxes at all.

Bloomberg says Eoin Dorgan, a spokesman for the Irish Department of Finance, declined to comment on Google’s strategies specifically. “Ireland always seeks to ensure that the profits charged in Ireland fully reflect the functions, assets and risks located here by multinational groups,” he said.

This is a ludicrous statement given that 2 of Ireland's biggest companies are based at a Dublin law firm and are owned by software giant Microsoft. They are used to collect funds from other overseas units including income.

VIDEO: Bloomberg: How Google saves billions in taxes

SEE Finfacts report: US companies pushing for new corporate tax amnesty to return billions of cash from overseas

Did Google dodge its taxes by using offshore loopholes to save $60B? Insight with David Goodfriend, former Clinton White House official and Rep. Jeb Hensarling (R-TX):

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