Big firms play 'Double Dutch' to skip on tax | thetelegraph.com.au
Apropos the whole theme of how taxpayers act when taxes are increased, witness this scheme used by Google, Facebook and others to avoid corporate taxes.MULTINATIONAL corporations including Google, Facebook, Apple and eBay are likely to have short-changed Australians by more than $1 billion in lost tax revenue thanks to an arrangement dubbed by Treasury as "the Double-Dutch Irish Sandwich".
It seems that when one pays for advertising on Google, for example, one buys it from an Irish subsidiary of the company which pays a 12.5% corporate income tax then transfers the money to a Dutch subsidiary. Being within the EU this transfer is tax free. The Dutch subsidiary then pays a tax deductible royalty to a Bermuda subsidiary.
This has predictably set politicians in France, Australia, etc. to huffing and puffing about these multinationals not pulling their weight with regard to their own national need for tax revenue. But what the companies are doing is perfectly legal, and the politicians are hamstrung by international trade treaties when it comes to slapping taxes on international financial transactions at their end.
Or, as they no doubt say at Google, three cheers for globalization!