Tax minimisation scheme.
Tax minimisation scheme
Large global companies like Google, Apple, Lilly, Oracle, Facebook and Microsoft also take the opportunity to take advantage of using tax heavens in order to minimise costs. In fact, according to the US Government Accountability Office, 83 out of 100 largest public traded companies rely on their offshore subsidiaries in order to save on tax bills.
Google, the most popular engine search in the world, uses two tax minimisation schemes known as “Double Irish” and “Dutch Sandwich” where profit is moved through Ireland and the Netherlands to Bermuda. Using these offshore jurisdictions shelters helps to save the company around $2 billion in the form of income taxes each year. In this way the real tax rate Google pays is around 19% instead of 39.2%.
The US government is obviously dissatisfied with the way the one of the biggest Internet companies conducts its savings and is trying to find a way to make such gigantic companies to pay taxes in full.
Another example of tax heaven use by large multinationals includes Facebook that also uses the same kind of sandwich tax minimisation scheme.The company has saved around $700 million by using the Cayman Islands offshore jurisdiction as part of the “double Irish” tax reduction strategy.
Microsoft has managed to keep half of its retail revenues offshore between 2010 and 2011 and retaining around 90% of its cash oversees. Apple keeps around 70% of its cash in offshore jurisdiction where tax rate is much lower. Usage of such offshore tax shelter schemes, however, is completely legitimate and this is why these companies have never been accused of violating tax laws.
