Google Inc may be committed to doing no evil, but that does not seem to prevent it being as secretive as the next US multinational about its tax returns, writes John McManus.
Its most recent quarterly filings with the SEC contain the rather enigmatic sentence: "Our 2003 through 2006 tax years remain subject to examination by the IRS for US federal tax purposes and our 2002 through 2006 tax years remain subject to examination by the appropriate governmental agencies for Irish tax purposes".
When asked what this meant the company's Irish spokesman issued the following statement: "With regard to Note 11 of Google Inc's most recent quarterly SEC filing, Google is always happy to work with any appropriate tax authority, including in Ireland, because we comply fully with all local laws and regulations."
Not very illuminating. But don't worry, help is at hand in the form of the world's most popular internet search engine. You know the one that has as its mission to organise the world's information and make it universally accessible and useful. That's right . . . Google.
Unfortunately, if you type "Our 2003 through 2006 tax years remain subject to examination by the IRS for US federal tax purposes and our 2002 through 2006 tax years remain subject to examination by the appropriate governmental agencies for Irish tax purposes" into Google.ie and press "search the net" you get nothing.
Or to use the jargon of Google "the search did not match any documents". A number of remedies are suggested, namely to try different keys words or more general keys words.
So let's try; "subject to examination by the IRS for US federal tax purposes". Type that in a hit "I'm feeling lucky" and you are taken to a page on the Internal Revenue Service site that displays a document entitled "Industry Director Directive #1 on International Hybrid Instrument Transactions". For those interested in such things, these are defined as "cross-border financing arrangements in which the taxpayer takes different positions in its treatment of the transaction as debt or equity for US and foreign tax purposes".
Whether this has anything at all to do with Google is a moot point, but it seems completely unrelated.
More interesting is what you get when you type in "subject to examination by the appropriate governmental agencies for Irish tax purposes" and hit "I'm feeling lucky". You don't get taken to some random technical document on the Revenue Commissioners home page, instead you get taken to a page on the Irish site of accountants KPMG.
It opens a four-page document entitled Doing Business in Ireland - Business Taxation. The only other text on the page is the sentence: "Ireland offers one of the lowest corporate tax rates on trading in the European Community". The document then sets out the delights of the Irish tax code for multinationals as seen by KPMG. Again there is no reference to Google.
Those familiar with the workings of search engines can no doubt offer some rational explanation for all of this based on search patterns and algorithms. Those of us with social lives and newspaper columns to write can instead enjoy a wry smile over the serendipity of it all. (Google Ireland Limited's accountants Ernst & Young might wonder at the unfairness of it all).
Of course, it does not really tells us anything we do not know. Anyone who thinks that the main reason Google has its European head office in Ireland is not the tax environment is deluded. And this point was hammered home in the accounts for the Irish operating company Google Ireland Ltd which were released last week.
Along with the reported increase in turnover from €1.6 billion to €3.3 billion was a single line under the heading Research and Development: "No significant research and development was carried out during the year". Again Google did not bend over backwards to clarify what this meant, saying: "With regard to research and development, Google Ireland Limited cannot elaborate, for competitive reasons, on what is already contained in its annual filing."
Most enigmatic. But to be fair to Google it should be noted that Google Ireland's immediate parent Google Ireland Holdings has spent money on research and development in the past, some €100 million in 2004.
However, this company no longer files accounts and has adopted unlimited status. It is owned by a company in Bermuda and has four directors who are respectively an attorney, a treasury and risk manager, a tax director and a international tax manager according to the most recent annual return. This sends its own message about the purpose of the structure put in place in Ireland.
There are, however, a couple of other numbers in the Google Ireland Ltd accounts that need to be taken into account before indulging in an orgy of "tut tutting" about the gap between all this and the high-minded corporate guff spouted by Google's representatives on Earth. In 2006 the Irish operation employed 675 people, paid them an average of €54,000 each, plus another €7,000 worth of Google shares.
Hard to see anything so terribly evil in that.
