Google shelters profits in tax free Bermuda account, saves $2 billion

 Google has avoided about $2 billion in worldwide income taxes for 2011 by moving $9.8 billion in revenues into a Bermuda company (a shell company) which doesn’t have a corporate income tax.

Legalling funneling profits from overseas into Bermuda cuts its overall tax rate in nearly half.  The amount moved to Bermuda is equivalent to about 80 percent of Google’s total pretax profit in 2011.

Google joined Amazon as another global company who is sheltering revenues by using offshore accounts.

Becoming public in a November 21 filing, outrage is spreading across Europe and the US, decribing the move as “tax dodging.”

The European Union’s executive body, the European Commission, advised member states to create blacklists of tax havens and adopt anti-abuse rules. Last week’s move by the EU were instigated by moves like this, calling corporations “scandalous” and “an attack on the fundamental principle of fairness.” Algirdas Semeta, the EC’s commissioner for taxation, said at a press conference in Brussels.

In a statement from corporate headquarters in Mountain View, Calif., Google said that it complies with all tax rules. The company also said its European investments help those countries’ economies and businesses, and provide thousands of jobs.

Last week, Reuters reported how Amazon has avoided income taxes — $1.5 billion, the IRS claims — by channeling sales through Luxembourg. In the course of accumulating $2 billion to finance expansion, the Seattle-based retailing behemoth has also evaded paying hundreds of millions of dollars to European countries.