Alphabet Inc (NASDAQ:GOOGL) subsidiary Google is under investigation by the Italian tax police, who suspect the tech giant of having evaded $247.5 million (227 million euros) in taxes in their country between 2009 and 2013.
The report, which is scheduled to be handed over to Google later today, couldn’t have come at a worse time. Citizens all over Europe, angry over perception that they mostly shouldered the burden of reviving their individual country economies, are criticizing multinationals that haul away their profits to offshore tax havens such as Bermuda.
EU Antitrust Regulator Weighs In…
When requested for a comment about the Italian tax report, a Google spokesperson said: “Google complies with the tax laws in every country where we operate. We are continuing to work with the relevant authorities.”
At the same time, the European Union antitrust watchdog on Thursday disclosed plans to investigate the back tax deal agreed to by Google and Her Majesty’s Revenue & Customs after an unnamed person linked to the Scottish National Party voiced concerns in a letter. The announcement came after Margrethe Vestager, a European Competition Commissioner, said on BBC radio that she was ready to investigate Google’s tax settlement provided she received an official complaint.
Recent figures show that Google paid taxes totaling 2.2 million euros in Italy in 2014 out of revenues of 54.4 million euros. However, the country’s Communications Authority insists that the Internet giant earned revenues about 10 times more.
The Italian tax authorities disclosed that Google lowered its tax bill by saying the company is based in Ireland rather than in Italy.
Last week, Google reached a deal with the UK tax authorities to pay 130 million pounds ($185 million), a figure termed as “derisory” by the opposition Labor Party. Google’s British tax bill was around 200 million pounds in the past 10 years. The company earned revenues estimated at 24 billion pounds in the UK, a figure that should net in taxes of about 2 billion pounds. The calculation is based on Britain’s 30 percent company tax rate.
Investigation Follows Apple’s Settlement
A month ago, Apple Inc (NASDAQ:AAPL) reached a settlement with Italian tax authorities to pay 318 million euros to clear accusations that it didn’t pay taxes earned for six years. The Cupertino, California-based tech firm was accused of failure to declare at least $1.3 billion (1 billion euros) of revenue to the authorities in 2013.
However, investigations revealed that Apple, through its subsidiary Apple Italia paid $32.77 million (30 million euros) in taxes. The findings triggered further inquiry that resulted in Google having to pay taxes relating to 2008-13 period.
The European Commission on Thursday waded into the issue of how multinationals should be taxed by proposing that EU countries should tax corporate profits earned within their jurisdiction, regardless of whether such profits have been shipped to tax havens. Most of the multinationals under tax investigations are mostly in the tech sector.