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December 11, 2012

Google shifted $10bn revenue to Bermuda to avoid $2bn in income taxes: report

Sarch engine giant trimmed its overall tax rate almost by 50%

By CBR Staff Writer

Search engine giant Google has reportedly shifted $9.8bn in revenues to its Bermuda subsidiary to avoid paying the global income tax of about $2bn in 2011.

The search engine giant trimmed its overall tax rate almost by 50% by legally directing profits from worldwide subsidiaries into Bermuda, as the country doesn’t have a corporate income tax.

According to Bloomberg, the amount which was transferred to Google’s Bermuda subsidiary is equivalent to about 80% of the firm’s total pretax profit during the year, which could increase outrage over tax evasion by large international firms.

In November 2012, the UK lawmakers investigated Google, Amazon and Starbucks for employing complex accounting methods to avoid tax liabilities in the country.

During the investigation, Google also conceded that it employs European tax jurisdictions which favour their operations in the UK.

However, Google UK chief executive Matt Brittin had admitted to operating in Ireland and Bermuda due to reduced tax rates.

Governments of France, the UK, Italy and Australia are also investigating Google’s tax avoidance as they seek to increase revenue during economic uncertainty.

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According to Google, the firm paid £6m corporation tax on £2.5bn of UK revenues during 2011.

In 2011, Google reported a tax rate about 3.2% on the profit it generated worldwide, while most of its foreign sales were in Europeannations that have corporate income tax rates ranging from 26% to 34%.

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