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Monday, March 21, 2011
Google Inc. (GOOG) received questions from the U.S. Securities and Exchange Commission in December about earnings in other countries that may have reduced the company’s tax bill, according to regulatory filings released today.
SEC officials asked Google for “disclosures to explain in greater detail the impact on your effective income tax rates and obligations of having proportionally higher earnings in countries where you have lower statutory tax rates,” according to a Dec. 2 letter.
The company responded to the requests for information, the filings show. The SEC said in a Feb. 3 letter that it had completed its review of Google’s filings, and has “no further comments at this time on the specific issues raised.”
Google, owner of the world’s most-popular search engine, has used a strategy that has gained favor among some U.S. companies to reduce taxes. Google cut its income taxes by $3.1 billion over three years by shifting the bulk of foreign profits to Ireland, then the Netherlands and eventually to no-tax Bermuda, according to regulatory filings in the U.S. and abroad.
The tax-cutting strategy, involving a pair of techniques known as the “Double Irish” and the “Dutch Sandwich,” helped cut the company’s income-tax rate to 2.4 percent on the profits it attributed to its foreign subsidiaries during the three-year period, filings show. The statutory corporate income tax rate in the U.S. is 35 percent.
Google rose $15.44 to $576.50 at 4 p.m. New York time on the Nasdaq Stock Market. The shares have declined 2.9 percent this year.
Overseas Profits
U.S. multinational corporations had more than $1 trillion in profits stashed in overseas subsidiaries on which they had paid no U.S. income tax as of the end of 2009, according to data compiled by Bloomberg.
Read More: http://www.bloomberg.com/news/2011-03-21/google-questioned-by-sec-over-earnings-in-low-tax-countries-1-.html
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