Google uses transfer pricing to avoid paying European taxes
July 27, 2014 | 9:25 am
One of the most commonly-heard complaints about Amazon, at least in Europe, is that it sells e-books from a division based in Luxembourg so that it can charge a much lower VAT (Value-Added Tax, the European equivalent of sales tax) rate on its e-books than UK law allows. The unspoken implication is that everyone else must surely pay all the taxes they owe like good little corporate boys and girls.
But Ars Technica reports that Google uses a practice called “transfer pricing” to assign most of its European revenues to an offshore subsidiary in Bermuda and avoid paying taxes on its revenue. In 2013, Google was able to pay only one sixth of one percent of tax on its €17 billion ($22.8 billion) European revenue. The practice even drew a condemnation from President Obama.
Frankly, I doubt that any huge corporation would not use any trick it could to minimize the taxes it pays. Making the most money they can for their shareholders is what corporations are for. And the ways they do that include paying as little money as they can to anybody else. If you’re going to complain about one big corporation doing it, you should be complaining about all of them. Or you at least shouldn’t be trying to use that as proof that the one company is somehow indisputably more evil than every other major corporation that does the same thing.