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Google shifts $12b to Bermuda

Internet giant Google has revealed its Dutch arm funnelled nearly $12 billion to Bermuda to avoid paying tax on its profits.

The latest figures show that Google Netherlands Holding, raked in $1.6 billion from its Irish sister company and $315 million from Singapore.

Most of the money was then channelled to Google Ireland Holdings, a Bermuda-based firm.

The scheme reduced Google's effective corporate tax rate to five percent — most of which is paid in Ireland, which has relatively low tax rates.

The figures were revealed in the latest filings by one of Google's Dutch subsidiaries and means that royalty payments paid to Bermuda — where the firm holds its non-US intellectual property — have doubled over the past three years.

Google's tax arrangements — although legal — have been condemned in the UK and other European countries and prompted politicians to look at a crackdown on corporate profit shifting.

Google, based in the US, uses differences between the US and Irish tax codes, which means it is seen as an Irish company by US tax authorities, but as a Bermudian firm by the Irish taxman.

Google last year only paid 2.6 percent tax in the US on sales worth $8.1 billion — because it channelled most of its overseas profits through Bermuda, which has no corporate income tax.

The UK arm of the firm, as well as other European operations, are designated as providers of marketing services to Google Ireland.

But Google declares little profit in Ireland because it sends nearly all the cash it gets to the Bermuda arm in the form of licence fees for intellectual property.

Westminster MP Margaret Hodge, the chairman of the Public Accounts Committee, said Google's tactics were “evil” and said the firm was “devious, calculating and unethical.”

Google has insisted it follows the tax laws in all the countries it operates in and pays little tax in the UK because it profits are not generated by UK employees.

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Published October 14, 2013 at 9:00 am (Updated October 13, 2013 at 5:44 pm)

Google shifts $12b to Bermuda

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