Google's Tax Dodging Ways Explained | Anorak

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Google’s Tax Dodging Ways Explained

A REPORT out of the US about an investigation into Google’s tax dodging ways.

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.

Something’s going on, obviously. What is actually going on is technically complex but can be, at the risk of losing a bit of detail, explained simply enough. There’s essentially two rules you need to understand.

1) An American company only pays the corporate income tax (what we call corporation tax) on profits it takes back into America. If an American company makes profits in, say, Ghana, the profits stay in Ghana or move anywhere in hte world other than the US, then the US doesn’t tax those profits.

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Posted: 14th, October 2011 | In: Money | Comment