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July 1, 2013 11:34 am

Report: Israel is Losing Out on Google’s Advertising Riches

avatar by Zach Pontz

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Google offices. Photo: rakerace.com.

Google’s extensive presence in Israel may benefit the country in many ways, but as a taxpayer is not one of them.

Israel’s Channel 2 reports that, despite Google earning millions of dollars in profits a month from Israeli advertisers, the government doesn’t see a cent. This is because Google transfers the profits to its headquarters in Ireland.

Ireland’s corporation tax rate of 12.5 percent is the second-lowest in Europe, with only Bulgaria and Cyprus’s 10 percent rate being  lower.

The scheme has caused controversy in the U.S.  as well, where a senate committee earlier this year grilled the CEOs of other corporations that take advantage of a scheme, called a “double Irish,” which the Christian Science Monitor describes as follows:

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“A ‘double Irish’ involves setting-up two Ireland-based companies – for example, Google Ireland and Google Ireland Holdings – one of which is, under Irish law, held to be headquartered elsewhere (usually a very low tax jurisdiction). This company will hold the intellectual property rights, which are then licensed to the second company. The second company can then offset royalty payments to the first as tax-deductible expenses.”

For its part, Google has remained defiant, saying that that it complies with all tax laws and that politicians have the power to change the laws if they deem them illegal.

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  • Noevil9

    That sounds kind of logical. Then the question would be; why does Israel have no problem with most Jewish owned companies in the United States, and other countries, that also use very similar loops, if not more, and funnel their monies to Israel in specific, and other tax heavens in general? Never mind the thousands of Tax exempt Jewish Orgs and institutions that send what amounts to Billions of $$$ to Israel every year? Double standards are not comforting to any one, lets bear that in mind.

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