Google 2.4% Rate Shows How $60 Billion Lost to Tax Loopholes

The IRS is intent on harvesting the assets of countless so-called “US persons” living outside the US, including individuals who had no idea they were US citizens. Meanwhile, the same IRS assisted Google in income shifting that saved Google $3.1 billion in taxes over three years.

From the Bloomberg article (link below):

“After three years of negotiations, Google received approval from the IRS in 2006 for its transfer pricing arrangement, according to filings with the Securities and Exchange Commission.

“The IRS gave its consent in a secret pact known as an advanced pricing agreement. Google wouldn’t discuss the price set under the arrangement, which licensed the rights to its search and advertising technology and other intangible property for Europe, the Middle East and Africa to a unit called Google Ireland Holdings, according to a person familiar with the matter.”

http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-shows-how-60-billion-u-s-revenue-lost-to-tax-loopholes.html

Google was able to avoid taxes through a no-risk process supported by the IRS. Compare this with the December 2011 so-called amnesty for individuals, described by tax expert Kevyn Nightingale as ,”pay your money and take your chances.”

 

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3 thoughts on “Google 2.4% Rate Shows How $60 Billion Lost to Tax Loopholes

  1. I hope no-one is surprised at this favouritism for big business – it’s a universal truth ain’t it?

  2. Precisely. The real onshore fat cat tax evaders with their fancy offshore structures can get keep shoving money at their expensive lawyers until they get their Private Letter Rulings and Advance Pricing Agreements. Us ordinary expats? The IRS won’t even give you a straight answer about whether or not you have to file Form 3520 in order to own a house in Mexico. (And Brian Dooley can claim with a straight face that “the IRS is the world’s greatest tax agency“).

    The biggest supporters of the transfer pricing abuse which lets Google pull shenanigans like this are the cross-border tax firms, who can earn millions of dollars in consulting fees looking for “comparable transactions” or whatever other garbage they use to justify an “arm’s-length price”. In the mean time, small businesspeople who can’t afford to pay the “tax-attorney tax” for all this expensive advice are simply denied the ability to split up our operations among multiple tax jurisdictions.

    And those giant cross-border tax firms like KPMG and Deloitte are the same ones who are setting the tone of FATCA coverage in literally every country besides Canada and a few in Europe, because they’re the only ones who have the resources to translate everything into local languages and to hire PR firms to get their preferred message in front of the domestic media.

  3. The UK/US tax treaty is very clear that UK peisonn schemes are treated in the same way as US schemes, i.e. taxed by the state of residence only on withdrawal. The definition of a peisonn scheme is clearly spelled out in the protocol (i.e. side letter) to the treaty: it’s anything that the UK government classifies as a peisonn scheme. It’s a very reciprocal treaty. So a UK citizen moving to the US has many of the same tax advantages for his/her peisonn scheme(s) as a US citizen moving to the UK. I think that the discussion here is around Form 3520, which affects some UK personal peisonn plans and is hugely painful to generate each year. Employer peisonn schemes, whether in trust or not, seem to be explicitly exempted from Form 3520 filing requirements.

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