Google parent company Alphabet closes its off-shore tax avoidance scheme. It allowed them to stash profits in tax havens to avoid paying US taxes on the money.
Wonder if there will soon be an SEC or DOJ settlement for past conduct?
#ButNothingsHappening
theguardian.com/technology/202…
Wonder if there will soon be an SEC or DOJ settlement for past conduct?
#ButNothingsHappening
theguardian.com/technology/202…
This involves declaring a foreign division of a company as the owner of 'intellectual property'. Then skimming off the profits to that division as 'payment' for the other divisions of the company using the product or service. Paying taxes at the rate charged in the other nation. 
High corporate tax rates in the US encourage companies to divert their profits & tax dollars to countries with lower rates & park it in a tax haven. So US companies have stashed over $1T in tax havens to avoid paying $350B in taxes on the money.
Actually they do stash money on Caribbean islands but they purposely structure their corporation to ensure that profits are booked in countries with low tax rates to claim they have paid their taxes.
That all started to change in 2017 as efforts began to shut down these tax avoidance schemes. US companies have been given a deadline by the end of 2020 to end this process & Google/Alphabet has said it is complying at an undetermined date...
But that might not save them...
But that might not save them...
Alphabet moved $24.5B in foreign profits to a holding company in Bermuda in 2018. This allowed them to avoid billions in taxes, moving money through multiple loopholes designed to allow this tax avoidance.
The process is not that complicated. Pay Irish division royalties for owning IP. Launder it through the Dutch affiliate where it can be transferred without a tax. Then into Google Ireland division in Bermuda....
Fortunately much of this $1T in tax havens has already started to flow back into the US due to @realDonaldTrump 's tax cuts. Apple (who previously claimed they had no money parked in the Caribbean) decided to bring home $252B!
Though, it is very likely that Google & many other companies have just found a new way to conduct tax avoidance as one loophole closes, another one opens. But it doesn't mean they won't face penalties for doing so.
A few months ago, France fined Google $1.1B dollars for shifting contract signing to Ireland so they could claim it was Irish profits not income earned in France.
Microsoft recently plead guilty to a similar scheme from Hungary to Ireland. But it also involved inflating licensing rates to hide that their 3rd party vendors were paying bribes to govt officials to win contracts.
