Google claims compliance with global tax rules, backs push for international standard

Google has said that despite concerns about where the search engine giant pays taxes, it's on-the-whole paying what it should, where it should.

The company said its overall global tax rate has been over 23% for the past 10 years, which it said was in line with the 23.7% average statutory rate across the member countries of the Organization for Economic Co-operation and Development (OECD).

"Most of these taxes are due in the United States, where our business originated, and where most of our products and services are developed," Google said in a blog post. "The rest we paid in the roughly fifty countries around the world where we have offices helping to sell our services."

Going to bat for its peers, Google said other US companies pay most of their corporate taxes in the US, "just as German, British, French, and Japanese firms pay most of their corporate taxes in their home countries".

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The post, penned by Google VP of government affairs and public policy Karan Bhatia, continues by saying the company supports the movement toward a new international framework for how multinational companies are taxed.

"Corporate income tax is an important way companies contribute to the countries and communities where they do business, and we would like to see a tax environment that people find reasonable and appropriate," she wrote.

The post follows a meeting by a group of 20 global finance leaders that agreed to plans that would see technology giants such as Facebook and Google pay more taxes.

At the time, it was reported that in a draft communique, G20 members agreed to implement common rules to close international loopholes that see multinationals able to book profits offshore in locations where the tax rate is low to avoid local taxation requirements.

The new rules that would come into place next year would mean higher tax burdens for large multinational firms.

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"The United States, Germany, and other countries have put forward new proposals for modernizing tax rules, with more taxes paid in countries where products and services are consumed," Google's post continued.

"We hope governments can develop a consensus around a new framework for fair taxation, giving companies operating around the world clear rules that promote a sensible business investment."

Google, however, is concerned that without a "comprehensive and multilateral agreement", foreign firms may have "discriminatory unilateral taxes" placed upon them.

"Indeed, we already see such problems in some of the specific proposals that have been put forward," Google said. "That kind of race to the bottom would create new barriers to trade, slow cross-border investment, and hamper economic growth."

Saying a global approach will restore confidence in the international tax system and promote more cross-border trade and investment, Google said it strongly supports the OECD's work to develop new tax principles.

"We call on governments and companies to work together to accelerate this reform and forge a new, lasting, and global agreement," the post concluded.

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