[governance] Re: Telecom TV on Google and Taxes

Wed Dec 12 11:07:05 EST 2012

More on Bloomberg:
http://www.bloomberg.com/news/2012-12-10/google-revenues-sheltered-in-no-tax-bermuda-soar-to-10-billion.html

On Thu, Dec 13, 2012 at 4:48 AM, Salanieta T. Tamanikaiwaimaro <
salanieta.tamanikaiwaimaro at gmail.com> wrote:

>
> Somehow it feels that there is a targeted media campaign out against the
> likes of Google and other mncs - the timing of the release is almost
> impeccable with the WCIT.
>
> Source:
> http://www.telecomtv.com/comspace_newsDetail.aspx?n=49763&id=e9381817-0593-417a-8639-c4c53e2a2a10
>
> Google “can make money without doing evil” (as it evades $2bn in taxes)
> Posted By TelecomTV One<http://www.telecomtv.com/go/?ct=9&id=e9381817-0593-417a-8639-c4c53e2a2a10>
>  , 12 December 2012 | 1 Comments<http://www.telecomtv.com/comspace_newsDetail.aspx?n=49763&id=e9381817-0593-417a-8639-c4c53e2a2a10#comments>
>  |    (0)
> Tags: *Google<http://www.telecomtv.com/results.aspx?tag=122&tagname=Google>
> * *corporate<http://www.telecomtv.com/results.aspx?tag=6972&tagname=corporate>
> * *tax <http://www.telecomtv.com/results.aspx?tag=434&tagname=tax>* *
> Finance <http://www.telecomtv.com/results.aspx?tag=365&tagname=Finance>*
>
> As the net closes around the multinationals that avoid paying corporation
> taxes, Google is accused of saving $2bn by routing income through a “Double
> Irish Dutch Sandwich”, paying tax of just 3.2 per cent on its overseas
> profits. Guy Daniels reports.
>
> Three questions. One; where do you stand on the subject of tax avoidance?
> We at TelecomTV believe that individuals and corporations have a duty to
> pay their fair share of tax. By fair, we mean whatever respective
> governments rule to be the legal requirement (after all, in most countries,
> we voted the politicians in to office). By all means try and mitigate the
> amount of tax you have to pay, using whatever accepted mechanisms are
> available. But avoidance? That just means somebody else (with far less
> access to expensive and clever advisors) has to contribute to your share as
> well.
>
>
>
> Second question: how do you define evil? The Oxford English Dictionary
> defines evil as “profoundly immoral and wicked” or “something which is
> harmful or undesirable”. In my book, that means tax avoidance is evil,
> simple as that.
>
>
>
> Third and final question: Is Google evil? If you believe that avoiding tax
> is wrong (especially through aggressive and mind-boggling complicated
> avoidance schemes) and if you believe that depriving society of tax
> revenues is wrong (and so reducing the level of available State support for
> the most needy) and could be described as an evil act, then surely you must
> conclude that Google is acting in an evil manner.
>
>
>
> An investigative report by Bloomberg<http://www.bloomberg.com/news/2012-12-10/google-revenues-sheltered-in-no-tax-bermuda-soar-to-10-billion.html> has
> discovered that Google avoided about $2 billion in worldwide income taxes
> in 2011 by shifting $9.8 billion in revenues into a Bermuda shell company –
> almost double its total from three years ago. The information was disclosed
> in a November filing by a Google subsidiary in the Netherlands, which was
> discovered by reporters from Bloomberg.
>
>
>
> It appears that Google legally routed profits from overseas subsidiaries
> into Bermuda, which doesn’t have a corporate income tax, thereby enabling
> it to cut its overall tax rate almost in half. Bloomberg says the amount
> moved to Bermuda is equivalent to about 80 per cent of Google’s total
> pretax profit in 2011.
>
>
>
> Tax evasion and avoidance costs the European Union a staggering €1
> trillion a year. That’s worth dwelling on for a moment longer…. €1
> trillion. No wonder politicians are now acting to try and prevent this
> financial loss and branding such acts as scandalous and immoral.
>
>
>
> Bloomberg has a good quote from a UK-based tax accountant, which pretty
> much sums up the feeling in Europe at the moment. According to Richard
> Murphy of Tax Research:
>
>
>
> “The tax strategy of Google and other multinationals is a deep
> embarrassment to governments around Europe. The political awareness now
> being created in the UK, and to a lesser degree elsewhere in Europe, is:
> It’s us or them. People understand that if Google doesn’t pay, somebody
> else has to pay or services get cut.”
>
>
>
> Just look what happened to Starbucks. When the public discovered the US
> coffee giant paid zero taxes in the UK (yes, absolutely nothing at all), it
> started to boycott the chain.
> Advertisement
> As a result, Starbucks was forced to “volunteer” to pay taxes…
>
>
>
> The UK is Google’s second-biggest market, responsible for about 11 per
> cent of its sales. Of the $4 billion it turned over last year, it paid UK
> corporation tax of less than $10 million. Bloomberg says Google avoids tax
> by using an Irish subsidiary to collects revenues from ads sold in the UK,
> which then pays royalties to another Irish subsidiary whose legal residence
> is in Bermuda. Payments are then sent to yet another subsidiary in the
> Netherlands (with no employees, note) before finally reaching the tax haven
> of Bermuda.
>
>
>
> Sounds pretty ‘evil’ to me. And if so, then that’s against the internet
> company’s guiding principles. Stated clearly on the “Ten Things We Know to
> be True” page on Google <http://www.google.com/about/company/philosophy/>’s
> website is the following:
>
>
>
> “You can make money without doing evil.”
>
>
>
> I’m sorry, Google, but I don’t see how avoiding tax is anything but evil.
> Of course you – and all companies – have a duty to shareholders to maximise
> profits. But there are rules. Some of these are merely ethical, whilst some
> are legal. There is no indication or suggestion that Google has acted
> illegally, but there is every suggestion that it has acted unethically.
>
>
>
> And who said you can’t have ‘ethical companies’? Of course you can. I
> don’t buy the ‘extreme capitalist’ viewpoint that corporations will only
> act in self-interest and never “do the right thing” or pay their fair
> share. If their customers start to boycott their services, then they’ll
> change. It happened with the sudden emergence of all the so-called
> ‘corporate responsibility’ positions that all featured heavily in annual
> reports. I don’t see why it can’t happen with fair tax positions.
>
>
>
> Other ICT companies reported in the media to be using this complicated tax
> evasion (sorry lawyers, of course I mean ‘mitigation’…) structure include
> Apple, Facebook, Microsoft and Oracle. Unfortunately, Google – and all the
> others, who no doubt will soon be named and shamed – will continue their
> sharp practices until they are forced to make a change. If governments
> can’t do that through the legal process, then it’s up to customers to vote
> with their feet and walk away from Google services. As Richard Murphy said,
> consumers are beginning to get the message that it’s “us or them”, and
> we’re already being squeezed by the many austerity measures that are in
> effect to drag us out of recession.
>
>
>
> Come on Google, time to step up to the plate and show some leadership. Pay
> your fair share. And then the rest of the ICT industry can do likewise. Or
> else remove that fatuous and out-dated “don’t do evil” slogan from your
> website once and for all.
>
>
>
> *Further reading: *The Pearse Trust<http://www.pearse-trust.ie/blog/bid/86105/US-Companies-Their-Use-Of-The-Double-Irish-Dutch-Sandwich> blog
> has a detailed explanation of the so-called “Double Irish Dutch Sandwich”
> tax scheme. Please don’t try and implement it.
>
>
>


-- 
Salanieta Tamanikaiwaimaro aka Sala
P.O. Box 17862
Suva
Fiji

Twitter: @SalanietaT
Skype:Salanieta.Tamanikaiwaimaro
Tel: +679 3544828
Fiji Cell: +679 998 2851
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