When a company spends millions on office slides, climbing walls and jumping castles for their employees, you get the feeling that something dodgy might be going on.
First, it was the massive global walkout protesting misogyny, sexism and sexual harassment in the workplace.
Now, they’re engaging in some rather shady behaviour, which helps them dodge paying taxes here in South Africa.
According to MyBroadband, Google moved €19,9 billion (R317 billion) through a Dutch shell company to Bermuda in 2017.
Bermuda is a tax haven, partly because companies which are incorporated in the country pays no corporate income tax.
The scheme used by Google, dubbed Double Irish, is a “base erosion and profit shifting” corporate tax tool used by US multinationals to avoid corporate taxation on their international profits.
Google’s tax avoidance includes South Africa. When you ask them whether they pay tax in South Africa, they get very shifty.
“We pay all of the taxes due and comply with the tax laws in every country we operate in around the world,” Google South Africa told MyBroadband.
“Google, like other multinational companies, pays the vast majority of its corporate income tax in its home country, and we have paid a global effective tax rate of 26% over the last 10 years.”
If you’re thinking that sounds vague – well, it is. Google doesn’t like answering questions about taxes. Unfortunately, their clever tax trick isn’t illegal.
If a non-resident company like Google is able to structure its business in such a way that its revenue streams are not “sourced” in the country, that revenue will not be subject to tax – regardless of whether the people who pay the company may be residents of that country.
In a nutshell, this means that even though Google is getting money from South Africans for ads, because the business is not “sourced” at Google South Africa – which directs the business offshore – the company is not taxed accordingly.
So in legal terms, Google isn’t doing anything wrong.
In ethical terms, they’re going to need to build a lot more slides and climbing walls if they want to come out of this one squeaky clean.
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