This is How Google Avoided USD 2 Billion in Taxes

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google-sign-9In light of FBR’s recent wish of taxing Google for the revenues it generates from Pakistan, an interesting finding has been unveiled by Bloomberg according to which Google dodged tax authorities in Europe and US to save a whopping USD 2 billion dollars in taxes in 2011.

To understand the whole thing, Google used a simple idea of putting the expenses in a company registered in a high-taxed country, while majority of the revenues were transferred to a subsidiary registered in Bermuda – a place where corporations aren’t taxed.

According to Bloomberg, Google shifted almost USD 10 Billion into a subsidiary registered in Bermuda, for all the revenues it generated through overseas subsidiaries (including those registered in UK, France and elsewhere).

Bloomberg says that this shift of money is actually the royalty fee paid by one Google subsidiary (Registered in Ireland) to another subsidiary of Google that is registered in Bermuda.

Hence, the royalty fee becomes as an expense in Ireland, while the profit of subsidiary company that received the royalty remains tax-free in Bermuda.

Google said it complies with all tax rules, without explaining that why it shifted USD 10 billion to a company that is registered in Bermuda and which has not a single employee.

  • Sir this is not tax evasion because it is done by goras. Please let the bootpolishers of the gora jootas give us their explanation.
    My view is simple, if you want to do business in my country you play by the rules of any other Pakistani corporation.

    • Ha ha, play by the rules of any other Pakistani corporation? You say that as if Pakistani corporations are GLAD to pay their taxes!

      Pakistani companies know how to dodge taxes just as well as Google, only Google does it without paying bribes.

  • This is perfectly legal. many companies do this and shift money to tax free zones. Most of the shipping companies in Pakistan are registered in such countries. This is how these companies develop their foreign exchange accounts. its a win win situation for all

  • Google ‘transfer pricing’ before reaching any conclusions. There are some loopholes in the US tax code but it is nowhere near any ‘Zardari Act’.
    Sincerely, A US CPA

  • What a waste of time,this article wasnt worth a news……Anything provided coverage by the local law is legal until constitutionally it is banned.
    If google doesnt give any explanation,they have a right….they did tax planning….tax evasion is a criminal offence how ever planning tax in such a way that your tax liability is deffered is totally allowable and acceptable.Loop holes are present in every country’s law and regulations.
    If i had a company,even i would have wished to perform my business in such a way which reduces my tax to maximum extent.

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