Google’s Bermuda Tax Avoidance “Unethical”

January 9, 2011

1google-logoGoogle has become one of the worst global corporate citizens after deciding to funnel profits through Bermuda to avoid taxes rather than reinvesting in countries where it does business, says the former head of a British TV network.

Luke  Johnson, one of Britain’s best known businessman and the former chairman of that country’s Channel 4, said Google “pays for no content whatsoever, but parasitically lives off the back of all those organisations that actually commission writers, actors, directors, producers to make original material.

“All those film-makers, journalists and others who are being thrown out of work can blame Google: they have ransacked the UK media industry, and are not even paying reasonable levels of tax on their usurious gains,” he said.

Mr. Johnson said Britain is Google’s second-largest market, generating approximately £5.7 billion in revenues in the last three years — most of it profit.

“It exploits tax havens such as Bermuda to legally avoid taxation,” he said, describing the multinational’s actions as “profoundly unethical”. ” … Effectively, Google invests negligible amounts in Britain, pays negligible amounts of tax on its underlying surplus to contribute to civil society, and yet extracts vast sums in advertising revenues.

“The tragedy is that those advertising revenues siphoned off to California should be used to help fund high-quality content –- TV programmes, radio shows, newspaper and magazine articles.

“… Britain punches way above its weight in the entertainment and culture industries – but we are also easily the biggest loser from Google’s assault, since none of the cash it extracts is recycled in any serious way in creative content.”

Since Bloomberg revealed in October how Google diverts profits from non-US operations to Ireland and then onward to tax-free Bermuda, the California-based Internet giant has been the subject of intense media criticism.

Google’s use of Bermuda for tax avoidance is being blamed, in part, for President Obama’s deep reluctance to grant US multinationals a “tax holiday” and repatriate  profits deposited in off-shore jurisidictions like Bermuda.

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  1. IRS Probes Google’s Bermuda Tax Avoidance | Bernews.com | October 13, 2011
  1. Billy McAdam says:

    “Unethical”?

    Then Bermuda’s a perfect fit. After all, we’re known worldwide now for the “unethical but not illegal”.

  2. UK Observer says:

    So, how is it “unethical” for a business to look for ways to save itself money? The main concerns of a business is to provide a service and make a profit – that’s why they exist. If there are legal ways to save money and boost their revenue, why shouldn’t they take it? That’s like telling an ordinary citizen they shouldn’t buy something on sale, just pay the full price, otherwise you’ll hurt the store business.

    I can imagine that if these profits ended up in the UK, not in Bermuda or Cali, Mr. Johnson would not be complaining. Such a double standard.

    • Peter Barrett says:

      If Luke Johnson owned Google he wouldn’t be doing anything different from what Google is doing now. Bermuda cannot be blamed for a US tax code that is a convoluted mess and results in corporate double taxation. Bermuda does nothing to assist Google (or any US corporation) in tax evasion. Bermuda does not cheat Uncle Sam.

  3. Graeme Outerbridge says:

    Smart business…all are welcome to Pirate island^^

  4. Googlybda says:

    Mr. Barrett,
    You are joking right? Bermuda taxpayers have been caught out time and time again using Bermuda for tax evasion!
    But tax avoidance is another matter. The legal or ethical issues and who’s to blame for the non payment of tax misses the point.
    Tax law is not written (or shouldn’t be written) with loopholes purposely written in. However they are there. Lawyer will find these legal loopholes and use them to reduce their clients tax liability.
    This has been to be a very very big number! In other words the intention of the tax law to collect those taxes has been sidestepped.
    The solution is to close the loopholes and to get financial information regarding companies/individuals using Bermuda.
    Bermuda nor the tax avoiders and evaders cannot sidestep this!

  5. Googlybda says:

    Let me point something out.
    If an individual applies to live in Bermuda and work, he has to prove he does not have a police record or bad health. Seems fair!
    Why are so many beneficial owners of Bermuda entities allowed to break the law in other countries including tax evasion, without repercussion in Bermuda. How do they get through Bermuda’s “STRONG REGULATION”?
    Peter keep repeating to yourself that Bermuda is not a tax haven and it will all go away! That’s what our government and Business Bermuda would have us believe is it not?