Alphabet Inc’s (NASDAQ:GOOGL) Google is putting an end to double sandwich and double Irish tax strategies. It is on the backdrop of Google to comply with new regulations in 2020. The company is comfortable to avoid tax on overseas ad revenues by moving funds until 2020 to countries like Bermuda, which doesn’t charge corporate tax.
Time to put an end to controversial loopholes
Google has been stashing ad revenues overseas using the controversial loopholes and saves taxes on billions of dollars. It is now time to put an end to such a strategy called Dutch Sandwich and Double Irish in 2020.
Google has been transferring the money to a Dutch holding company from an Irish subsidiary and then back to a Bermuda based Irish Shell Company, which has rights to license IP of Google. It is called a Dutch sandwich. Google doesn’t need to pay a corporate tax in Bermuda. Therefore, Google avoids paying income tax in the US. It also doesn’t pay withholding taxes on overseas profits in the EU. However, it pays some amount to the Irish government. In 2017, Google transferred $23 billion to Bermuda and avoided paying taxes.
Ireland closed the loopholes
Ireland closed the loopholes in 2014 on increased pressure from the EU and the US. It has given the time up to 2020 to companies like Google to respect the regulations. As a result, Google is changing its tax structure. The company will license the intellectual property from the US instead of from Bermuda.
Trump administration offers incentives
Trump administration has lowered the corporate tax to 21% from 35% to incentivize the companies that move overseas profits to the US. It is beneficial for Google, which sits on the overseas earnings of several billion dollars.
Cafeteria workers form a union
Google is accused of union-busting strategies. The US government is probing after it received complaints from recently fired executives. The cafeteria workers (2,300) at the headquarters of Google in Mountain View say they are underpaid and putting in more work hours to serve its employees. They are successful in creating a union. According to the available information, the workers organize a union Unite in which 300,000 thousand workers from the North American foodservice, casino gaming, warehouse, and laundry will take part.