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Google Searched For (And Found) The Perfect Tax Havens

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If you're like most people, you'd have to use Google to understand terms like 'Dutch sandwich' or 'double Irish'.

They're not items at a hipster pub, but rather complex tax avoidance schemes employed by Google to avoid paying billions in taxes around the world.

After Apple was ordered recently to pay Ireland 13 billion euros unpaid taxes, the public is beginning to understand the full extent of tax avoidance strategies used by these digital giants.

What happens, essentially, is that Google sets up a subsidiary in a place like Ireland, which has a very low tax rate already. But Google isn't interested in paying even that.

Then, they route all their profits from other countries to this subsidiary. Even though they have offices across Europe, for instance, those offices don't handle the money.

Most of the money leaves the country of origin, and ends up in Ireland. So does Ireland at least get those taxes? Don't count on it.

Through a complicated bit of shuffling, the money is shifted to places through the Netherlands before returning to Ireland, and then generally ending up in offshore accounts in the Caribbean, impervious to other tax authorities. Google's tax haven of choice has been Bermuda, which features a 0% corporate income tax.

Hence the 'Double Irish' and 'Dutch Sandwich'.

In the past, Google's actual overseas tax rate has been as low as 2.4% -- across many countries where normal tax rates would be over 20%. Even Ireland charges a measly 12.5%.

Google has maintained that these arrangements are entirely legal.

Many countries have disagreed.

A quick Google search of "Google tax raid" shows that tax authorities have all raided Google's offices in Spain, Italy, and France - all in this year. Governments allege Google hid at least 1.9 billion euros in taxes.

In France alone, Google earned 1.7 billion euros in one year, but claimed to earn only 225 million euros -- and only paid 5 million euros in tax.

After a six-year investigation, even the UK determined that Google wasn't paying its fair share of taxes - effectively 3%, according to politicians there.

Widespread public anger led to Google agreeing to pay 130 million pounds there. But many in the public said even that was too little.

In Australia, Google came to be investigated by the Australian Tax Office and a senate inquiry, which revealed they similarly hid nearly all of their profits from the government.

Why does this matter in Canada?

Right now, we simply don't know where the money goes that Canadians and businesses pay to Google. Google's annual reports don't break out their profits from their operations in Canada.

Is Canada collecting any tax from this digital behemoth?

Sales taxes aren't being charged on sales of online ads, as they are in places like the European Union and Australia.

Most likely, Google is also able to avoid paying corporate tax on much of the profit it accrues in Canada.

But this doesn't just impact what governments can spend on services and infrastructure - even though those are hugely important.

It used to be that most advertising money went to things like newspapers, TV, and radio. Canadian journalists, musicians and actors and many other workers in the cultural industries depend on this advertising revenue for their jobs. Now, more than a third of all ad spending goes to online advertising which is dominated by multinational giants like Google and Facebook, which between them, capture 65% of all online advertising.

And the Canadian government has exempted them from having to pay any taxes or abide by Canadian content requirements on the dubious grounds that because they have no physical presence in Canada, even if it sells goods and services in the country, it is deemed not to be "carrying on business" for the purposes of tax collection.

The result is less revenue that governments need to provide public services such as health and education, job losses in Canadian newspapers and cultural industries and an undermining of Canadian culture.

What we need is a government that's not afraid to stand up to these digital multinationals, as the European Union has done with Apple.

We need to see this government demand that these digital multinationals pay their fair share.

We've launched a Level the Playing Field campaign, and we hope you'll join us in standing up for tax justice.

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