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03/01/2013 by
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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.

shutterstock 2652563 Google Funneled £6 Billion To Bermuda

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!

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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.

 

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Comments (5)

  • Igor Beuker 03/01/2013, 17:47

    Most profitable moguls do it like this. It’s up to politics to set the rules.

    In The Netherlands there is a much bigger problem: the current outrageous shaped cookie/ privacy laws are destroying a whole industry.

    This might not only decrease the revenues, profits and number of jobs (thousands!) of one of the only growing industries at the moment. For the long run, this might decrease incoming taxes for the government with 100′s of millions each year.

    That is how short term the “party populism” (winning a few extra votes?!) has led to the demolition of a fast growing industry. If we are lucky, EU Neelie Kroes will be able to help Holland to re-engineer these laws, hopefully just in time…

    Most politicians would not even make it to the board of companies that are so profitable as Google, and other moguls. Short term, populism to win short term votes, no clue how to shape a country and its future economy!

     
    • First party cookies are permitted after all, but I agree with you it’s killing for E-commerce… hardly any insight on the performance on your Adwords campaigns.. but I also heard of new developments that don’t need cookies anymore in order to gain data…

       
  • Igor Beuker 03/01/2013, 18:04

    It’s truly amazing how history repeats itself in digital vs politics.. With IAB Europe I went to Brussels in 2001, 2002 and 2003 to inform the telecom ministers about cookies, still have the PPT!

    At that moment we were able to show them the real facts about cookies and privacy, so they turned aournd their plans that were mostly based on assumptions and miss-information.

    Neelie Kroes will get it done. She always does!

     
  • Igor Beuker 03/01/2013, 18:09

    Maybe I should. Even a 5-year old understands this explanation. I did thank Neelie Kroes on Twitter, you should have seen her talk at Le Web Paris: she still rocks!!

     
 
 
 
 
 
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