Google's practice of channeling its revenues through Ireland is getting the company into trouble yet again. This time, onlookers in Australia have taken note, and although no government officials have become involved, people are definitely unhappy that Google may be shirking its tax obligations.
Here's the thing: Ireland offers a lower corporate tax rate than most other places in the world. So Google set up its EU headquarters in Ireland, and can save money by letting Ireland tax all sorts of revenue, regardless of its point of origin.
This approach necessarily deprives other countries of funds, though. Accountants and politicians in the UK have calculated that Google avoided paying their government $160 million in 2007 and $725 million in 2008, in fact.
And now folks in Australia are performing similar calculations. Julian Lee observed today, "Despite its near total dominance of the search advertising market, Google does not make one red cent through advertising, according to its latest set of accounts. Instead Google Australia, which analysts estimates makes about $700 million a year from Australian advertisers, is a mere 'service provider' that makes about a sixth of that collecting fees from its head office and a subsidiary in Ireland."
As a result, Google only paid $714,457 in taxes in Australia last year, and Australians might well like to see a bigger piece of the pie.