“The U.S. Internal Revenue Service is auditing how Google Inc. avoided federal income taxes by shifting profit into offshore subsidiaries, according to a person with knowledge of the matter,” Jesse Drucker reports for Bloomberg.
“The agency is bringing more than typical scrutiny to how the company valued software rights and other intellectual property it licensed abroad, said the person, who requested anonymity because the audit isn’t public,” Drucker reports. “The IRS has requested information from Google about its offshore deals after three acquisitions, including its $1.65 billion purchase of YouTube, the person said.”
Drucker reports, “The transfer overseas of these kinds of rights has enabled Google to attribute earnings to foreign units that pay lower taxes, Bloomberg News reported a year ago… Google, owner of the world’s most popular search engine, has cut its worldwide tax bill by about $1 billion a year using a pair of strategies called the “Double Irish” and “Dutch Sandwich,” which move profits through units in Ireland, the Netherlands and Bermuda. Google reported an effective tax rate of 18.8 percent in the second quarter, less than half the average combined U.S. and state statutory rate of 39.2 percent.”
“U.S. companies are sitting on at least $1.375 trillion in earnings in their foreign subsidiaries on which they have paid no federal income taxes, according to a May report by JPMorgan Chase & Co.,” Drucker reports. “Companies including Google, Cisco Systems Inc., Pfizer Inc., Apple Inc. and Microsoft Corp. are lobbying Congress for a tax holiday on bringing home those profits, which would otherwise be subject to U.S. income tax at the 35 percent corporate rate with a credit for foreign taxes already paid.”
Much more in the full article here.
[Thanks to MacDailyNews Readers “Fred Mertz” and “Edward Weber” for the heads up.]
Related articles:
Google joins Apple in push for U.S. repatriation tax holiday – October 3, 2011
Apple lobbies Obama for tax holiday, wants to bring overseas bounty home – August 24, 2011
U.S Senate Democrat Schumer allies with Apple, other multinationals on repatriation tax talks – June 21, 2011
U.S. companies push for tax break on foreign cash – June 20, 2011
Apple, Oracle, Duke Energy, others organize lobbying blitz for tax holiday – February 17, 2011
Tax no evil! Muhahahaha!
That’s how they brought Al Capone to justice.
Skip having Apple and Microsoft as your enemies; the IRS is the organization you least want to cross.
the “Double Irish” and “Dutch Sandwich” sound like sexual positions or the next two names for Android.
Do not be evil!
Read more about Google at http://www.fairsearch.org/presentations/the-google-problem/
“…$1.375 trillion in earnings…” Why tax it at 30 %? Just let companies bring it back for 12% and clear the national debt!
Lets get this straight. . . They make a ton of profit overseas, employing people for subsistence wages, putting American citizens out of work in the process, and now they what to repatriate that cash and give it back to their shareholders. Doesn’t this amount to subsidizing companies to take jobs to China?
Subsistence wages by your standards perhaps, but above average in their home country. And if, as has been pointed out many, many times, those products were made in America they’d be priced at levels few ordinary Americans, or anyone else, could afford. Of course, trustafarians like yourself would think nothing of handing over $1000 for a basic iPad or $800 for an iPhone.
Wrong.
So, why are foreign automakers like Honda, Toyota, Hyundai, BMW, etc. building cars in America and selling them for the same price or cheaper than their foreign made competition? Your argument makes no sense. These companies are investing heavily into American factories and labor as these cars are selling so successfully. Not only are these cars being purchased by Americans but are also being exported.
Robots have no wage
Your tax dollars help pay the worker wages for any auto company that builds on US soil.
You’re on about a different topic. The problem with what Google has done is that they’ve taken IP developed in the US, and shifted it to an offshore subsidiary, so that they can take advantage of minimal royalties in countries like Ireland and the Netherlands. This is similar to what the Rolling Stones and U2 have done with their music royalties. If Google moves their US-developed IP offshore, they might as well re-incorporate offshore, and not be a US company at all.
It seems to me that Google (and other companies) want to enjoy the benefits this country has to offer, but go an extra mile to avoid the responsibilities.
I dont know in a sense this country was founded at least in part on tax evasion.
Id love to say they are some onetime case here but a lot of companies are pulling stunts like this