Some 100 French tax officials entered Google’s Paris headquarters late last night. The raid was conducted as part of investigations of allegations of unpaid taxes by the internet giant. Google is accused of avoiding paying the French government €1.6 billion (about RM 7.3 billion).
European authorities have been paying closer scrutiny to large international corporations and how they do business. The practice of shifting income between subsidiaries to minimise taxes is commonplace, and the EU is no longer happy with the situation.
At the moment, Google’s tax structure allows it to pay tax in the Republic of Ireland; which has a substantially lower rate than other parts of the EU. The UK attempted to clamp down on the practice and managed to get Google to agree to pay an extra £130 million (about RM780 million) in taxes since 2005. The deal was widely criticised by other European nations and European competition authorities are looking into whether the arrangement amounts to illegal state aid.
France, on the other hand, does not appear to be allowing Google the same amount of room for negotiations. Finance minister Michel Sapin had earlier said that, “the French tax authorities do not negotiate on the amount of tax.”
The inquiry into Google’s tax reporting practices in France began last year, when the company was first accused of using legal loopholes to reduce tax paid. Google may not be the only company using these methods to increase profits, but it has managed to draw enough attention to itself to get attention from authorities.
[Source: The Guardian]