Create a free Industrial Equipment News account to continue

Google Raided for Taxes

Google, like many other corporations, is being accused of complex maneuvers that shield their profits.

If Google were to Google itself today, it might find some less than flattering portrayals of its business practices.

The search engine giant, owned by Alphabet Inc., was just subject to a raid at its French headquarters, with police looking for evidence of "aggravated tax fraud." Google, like many other corporations, is being accused of complex maneuvers that shield their profits, according to the AP.

France's investigation is focused on an Ireland subsidiary that enables Google to do business with customers across Europe while minimizing its taxes — a technique known as profit-shifting.

European regulators are increasingly pressing companies to pay taxes in the jurisdictions in which they do business, an issue that’s also come to light here in the U.S. In fact, nearly 90 percent of the cash held by the biggest five tech companies – Apple, Alphabet, Microsoft, Cisco and Oracle – is being kept in overseas accounts, essentially shielding it from U.S. taxation.

In April, the Treasury Department and IRS collaborated on a series of new rules meant to curtail the practice of tax inversions, the practice of companies incorporating on foreign soil to shelter themselves from certain U.S. taxes.

The first deal to fall victim to those new rules was Pfizer’s $152 billion merger with Allergan. This week, according to the New York Times, The American fertilizer maker CF Industries said that it had called off an $8 billion deal to acquire several European and North American operations from OCI of the Netherlands because the new rules made it less advantageous.

Steve Gill, a San Diego State University accounting professor issues told the AP that it's easier for tech companies to legally lower their tax bills than manufacturers because their businesses revolve around patents, algorithms and other intellectual property that's easier to move around than a plant.

This is IEN Now.

More in Regulation