All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

FREE: Google’s valuation of intangibles under audit

Google is under audit in the US following reports it uses transfer pricing to reduce its overseas effective tax rate down to just 2.4%.

The Internal Revenue Service (IRS) is investigating how Google values software rights, and other intellectual property (IP), owned by its offshore Irish subsidiary.

The audit follows reports last year that Google pays an overseas tax rate of 2.4% (compared to the corporate tax rate of 12.5% in Ireland) and a company-wide tax rate of 22.2% (the US rate is 35%) by using double-Irish and Dutch sandwich structures to limit the tax due on its IP.

According to Bloomberg, Google is now under audit for these actions and the inquiry is focusing on the financial arrangements other Google subsidiaries - YouTube, Postini and DoubleClick - have made with Google Ireland to pay for access to the IP.

Google maintains the investigation by the IRS is routine.

more across site & bottom lb ros

More from across our site

The Italian government published plans to levy capital gains tax on cryptocurrency transactions, while Brazil and the UK signed a new tax treaty.
Multinational companies fear the scrutiny of aggressive tax audits may be overstepping the mark on transfer pricing methodology.
Standardisation and outsourcing are two possible solutions amid increasing regulations and scrutiny on transfer pricing, say sources.
Inaugural awards announces winners
The UN’s decision to seek a leadership role in global tax policy could be a crucial turning point but won’t be the end of the OECD, say tax experts.
The UN may be set to assume a global role in tax policy that would rival the OECD, while automakers lobby the US to change its tax rules on Chinese materials.
Companies including Valentino and EveryMatrix say the early adoption of EU public CbCR rules could boost transparency of local and foreign MNEs, despite the short notice.
ITR invites tax firms, in-house teams, and tax professionals to make submissions for the 2023 ITR Tax Awards in Asia-Pacific, Europe Middle East & Africa, and the Americas.
Tax authorities and customs are failing multinationals by creating uncertainty with contradictory assessment and guidance, say in-house tax directors.
The CJEU said the General Court erred in law when it ruled that both companies benefitted from Italian state aid.