- Daily Zen
It is acceptable to say that all corporations are always on alert for loopholes that could serve as mediums to pay less tax, mostly for foreign profits. And this business phenomenon is not overlooked by high tech companies. A report published at Bloomberg show that Google saved as much as $3.7 billion in 2016 by exploiting tax loopholes while moving $19.2 billion (15.9billion euros) between Ireland, the Netherlands, and Bermuda.
More from the source revealed that Google has been using the infamous legal loopholes, also referred to as “Double Irish” or “Dutch Sandwich” to shelter monies from proper taxations by cutting foreign tax bill. It’s a model which provides evasion of high tax responsibilities for foreign profits.
According to a Dutch newspaper Het Financieele Dagblad, within the year 2016, Google saved about seven percent more than they did the previous year, at a tax rate of about nineteen percent. The process involves moving revenues from an Irish subsidiary to a Dutch company where Google has no employees. From the Dutch to Bermuda mailbox owned by another company registered in Ireland. This tax evasion is as a result of Ireland’s tax laws for locally registered companies overseas.
However, in 2014, Ireland government announced their intentions to close these loopholes starting from 2015. Information from the news recognized other tech titans such as Apple, Microsoft, Twitter, Facebook, and many others as active participants in the loophole exploitation. According to a report from the New York Times, on 14th of October, 2014, the Ireland’s finance minister (Michael Noonan) said, “I am abolishing the ability of companies to use the ‘double Irish’ by changing our residency rules to require all companies registered in Ireland to also be tax resident[s],” in a statement to his parliament.
But after intense regulatory scrutiny, the country offered more grace to the tax evading companies to exploit the loopholes until 2020. This means that Google and other technology giants are legalized to exploit the loopholes and move billions of the dollars with insignificant taxation for the next three years.
Responding to the loopholes exploitation claims, an interviewed Google spokesman recited the company’s commitment in helping to grow online ecosystem and also said “we pay all of the taxes due and comply with the tax laws in every country we operate in around the world.” That being said Google’s current overseas revenue is at about $60 billion which have not been repatriated due to the US taxes set at 35 percent for corporations – the company is afraid of losing most of the money to taxes. Rather, the funds could be allowed to remain overseas pending when new laws that would offer generous tax rates are implemented.
Recently, expectations are high that the newly passed bill by the House and Senate would establish a lower tax rate on overseas profits and provide easier channels through which companies can bring in monies regularly without paying mammoth tax rates. But for now, the supposed-closed “Double Irish” loophole still serve as a channel exploited by all tech titans to move overseas profits.