Google Funneled £6 Billion To Bermuda
The British Prime Minister David Cameron has called on world leaders of the G8 to tackle tax evasion by multinationals like Google.
Google funnelled £6 billion through the tax haven of Bermuda in a year, while paying just 0.1 per cent of that amount in British corporation tax.
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.
In a letter to Barack Obama, Angela Merkel, Vladimir Putin and other G8 leaders, the Prime Minister said ‘co-ordinated action is needed to make major corporations and wealthy individuals pay their fair share of tax’.
‘I do believe we all have a common interest in being able to tell our taxpayers who work hard and pay their fair share of taxes that we will make sure others do the same.’
Independent French data journalism website Owni retrieved Google Ireland’s records back in 2011, showing the company transfers its profits to an exotic tax haven in Bermuda. They’ve published these on Sribd.com:
According to Owni, these structures depend on the group’s director being specifically assigned to operations of tax exemption in the direction of Bermuda.
What does this mean?
In practical terms, when a French, English, or German user purchases services from Google (such as Adwords or Adsense) the credit card is debited to a bank account located in Dublin. Afterward a portion of the net profits generated by Google disappears in Bermuda via a holding company based in the Netherlands.
Other multinationals like Starbucks and Amazon are also being accused of engaging in “aggressive” tax avoidance and even called for a worldwide crackdown.
Remarkable fact is that Bermuda is part of the fourteen British Overseas Territories which are territories under the jurisdiction of the United Kingdom, although the island is not an official part of the UK. And now the British Prime Minister is addressing the world leaders…
What About You?
Do you think this the right way to avoid tax evasion? Shouldn’t Cameron be calling the tax havens such as Bermuda, Malta and Belize instead of the G8? Looking forward to your thoughts!
Image source: Shutterstock
About the author
Laurens Bianchi is an online marketing professional from the Netherlands and has been blogging on ViralBlog since 2008. Currently Laurens is a Managing Partner and Commercial Director at ICON&Co and Social Media Consultant for the Royal Dutch Football Association.