"More Companies Join Amazon In Using Tax Shelters To Hide Billions"
Last week, Reuters noted that the online retail giant Amazon had avoided hundreds of millions of dollars in taxes by stashing cash in Luxembourg, a notorious tax haven. Today, Bloomberg News’ Jesse Drucker reported that Amazon is not the only tech company employing this strategy — Google last year avoided $2 billion in taxes worldwide thanks to shifting money to Bermuda:
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 UK, in particular, has been cracking down hard on tax avoidance by multinational companies, including Google. “People want to know why companies which benefit from an infrastructure paid for by them and are paying people low wages who receive taxpayer-funded tax credits from the exchequer are not paying their fair share,” said Margaret Hodge, chair of the UK public accounts committee. .
In addition to corporate tax dodging, tax havens facilitate tax avoidance by the super-rich. According to the Tax Justice Network, the world’s wealthiest are shielding about $21 trillion in offshore tax havens. If that $21 trillion “was taxed at just 30 percent, this would generate tax revenues of nearly $200 billion — roughly twice the amount OECD countries spend on international development assistance.”