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Google Inc. (GOOG) avoided about $2 billion in worldwide income taxes in 2011 by shifting $9.8 billion in revenues into a Bermuda shell company, almost double the total from three years before, filings show.
By legally funneling profits from overseas subsidiaries into Bermuda, which doesn’t have a corporate income tax, Google cut its overall tax rate almost in half. The amount moved to Bermuda is equivalent to about 80 percent of Google’s total pretax profit in 2011.
The increase in Google’s revenues routed to Bermuda, disclosed in a Nov. 21 filing by a subsidiary in the Netherlands, could fuel the outrage spreading across Europe and in the U.S. over corporate tax dodging. Governments in France, the U.K., Italy and Australia are probing Google’s tax avoidance as they seek to boost revenue during economic doldrums.
“The tax strategy of Google and other multinationals is a deep embarrassment to governments around Europe,” said Richard Murphy, an accountant and director of Tax Research LLP in Norfolk, England. “The political awareness now being created in the U.K., and to a lesser degree elsewhere in Europe, is: It’s us or them. People understand that if Google doesn’t pay, somebody else has to pay or services get cut.”
Google executive chairman Eric Schmidt has dismissed criticism over how little corporation tax his company pays, saying it's just capitalism.
Schmidt is "very proud" of the corporate structure Google set up to divert profits made in European countries, such as the UK, to its firms in the low-tax havens of Ireland and The Netherlands, thus minimising its tax bill.
"We pay lots of taxes; we pay them in the legally prescribed ways,” he told Bloomberg. “I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate.
“It’s called capitalism. We are proudly capitalistic. I’m not confused about this."
Mr Schmidt, 57, was offered the job of Treasury or Commerce Secretary or a new "Secretary of Business" slot, according to the Washington Examiner.
An anonymous strategist for the Democrats told the newspaper: "Nobody's better positioned for a Cabinet job, if he wants one."
Mr Schmidt's rebuttal was swift, however, as he told the Wall Street Journal in an interview yesterday: "I said last time and I've said again that Google is my home. I have no interest in working for the federal government".
Mr Schmidt played in a key role in the re-election of President Barack Obama last month, helping to oversee Google's $700,000 donation to his campaign.
Mr Schmidt defended the company's legitimate tax arrangements. “We pay lots of taxes; we pay them in the legally prescribed ways,” he told Bloomberg. “I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate.”
“It’s called capitalism,” he said. “We are proudly capitalistic. I’m not confused about this.”
Originally posted by tracehd1
I gotta ask though....isn't this in some way ileagle? If not...then I think we all should be moving our money to Bermuda!!!
i no if i decided not to pay my tax's, the tax man would soon be breathing down my neck. but to proudly call it Capitalism!! .....but what can us little guys do???