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Google 2.4% Rate Shows How $60 Billion Lost to Tax Loopholes - Bloomberg
Google 2.4% Rate Shows How $60 Billion Lost to Tax Loopholes - Bloomberg
Googles income shifting -- involving strategies known to lawyers as the Double Irish and the Dutch Sandwich -- helped reduce its overseas tax rate to 2.4 percent, the lowest of the top five U.S. technology companies by market capitalization, according to regulatory filings in six countries.
Its remarkable that Googles effective rate is that low, said Martin A. Sullivan, a tax economist who formerly worked for the U.S. Treasury Department. We know this company operates throughout the world mostly in high-tax countries where the average corporate rate is well over 20 percent.
The U.S. corporate income-tax rate is 35 percent. In the U.K., Googles second-biggest market by revenue, its 28 percent.
Google, the owner of the worlds most popular search engine, uses a strategy that has gained favor among such companies as Facebook Inc. and Microsoft Corp. The method takes advantage of Irish tax law to legally shuttle profits into and out of subsidiaries there, largely escaping the countrys 12.5 percent income tax. (See an interactive graphic on Googles tax strategy here.)
The earnings wind up in island havens that levy no corporate income taxes at all.