HomeTech NewsHow Google and Apple do to pay less taxes worldwide

How Google and Apple do to pay less taxes worldwide

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It is a known fact that big tech companies like Google and Apple have managed to significantly reduce their tax liabilities worldwide. But how exactly do they do it? What impact does this have on the global economy?

First of all, it is important to understand that these companies are not doing anything illegal. In fact, they are using legal tax strategies to minimize their taxes, which you can read in depth in the following lines.

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Transfer pricing: This technique implies that a company moves its profits through its different subsidiaries in different countries to take advantage of different tax rates. “The issue of transfer prices is always on the table and it is a puzzle. With digital activities, the rules of a lifetime are no longer valid ”, that is in fact what José María Peláez, Treasury inspector, recognized.

Double Irish-Dutch: Involves that a company creates two subsidiaries in Ireland and one in the Netherlands, which are used to transfer profits to tax havens.

Tax havens: Companies also can establish subsidiaries in tax havens such as the Cayman Islands or the British Virgin Islands to reduce your tax liability.

These strategies allow these companies to pay less in taxes, which in turn allows them to invest more in research and development, giving them a competitive advantage in the marketplace. However, these methods also have a significant impact on the global economy.

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On the one hand, the countries where these companies operate lose tax revenue, in addition to affecting their budgets and public services. And if it was not enough, these companies may be competing unfairly with other companies who do not have the same resources to implement these strategies.

Despite the efforts of governments to close these tax loopholes, it is still a really significant problem. In fact, in 2016 the European Commission ordered Apple to pay €13 billion in back taxes to Irelandclaiming that the company had received preferential treatment from the Irish government.

Already in the case of Google, from the big G they have moved in recent years billions to the Bermuda Islands, this without recording the business benefits and all through a company domiciled in Dublin and another in Bermuda, with which Ireland has an agreement.

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One thing is clear, and that is that these big technology companies like Google and Apple have used legal tax strategies to significantly reduce your tax liabilities worldwide.

And while this allows them to invest more in research and development, it also has a significant impact on the global economy and certainly raises serious questions about tax justice. All in all, it will be interesting to see how these companies adapt and evolve in the future as governments work to close these tax loopholes.

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