Google Could Be Accused Of Tax Evasion In China

    November 19, 2007

America’s IRS has been the cause of more than a couple puddles of sweat.  So what sort of effect might the Chinese equivalent have on a person?  We may find out, as the Beijing Tax Bureau is apparently investigating Google for tax evasion.

Google China Google began offering services in China some time ago, then formally set up shop in the country several years later.  Therein lies the problem; as stated by ChinaTechNews, “once a foreign company begins business in China, it is reportedly obligated to pay the taxes for the previous five years.  So the report estimates that Google might have evaded over RMB100 million in taxes in China in the five years before 2006, based on its gross income of RMB285 million in 2006.”

100 million RMB comes out to about $13.5 million, and that amount wouldn’t exactly bankrupt Google.  The search giant is proclaiming its innocence, however, so this could become a large legal battle.

Any charges might also have an effect on the entire Chinese search industry.  Duncan Riley reports, “ . . . went on to say that the investigation could widen to include other online companies operating in China, including Taobao, Baidu and Yahoo.”

It’s a bit difficult to feel sorry for any of the companies, given what they’ve been up to in China.  Still, from a business or legal perspective, the tax investigations could have some major consequences.