Tech firms use ‘Double Irish,’ ‘Dutch Sandwich’ to avoid taxes

Updated Oct. 22, 2010 at 8:02 a.m.

Tech firms use ‘Double Irish,’ ‘Dutch Sandwich’ to avoid taxes

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Note: The Skinny blog is written by Rick Smith, editor and co-founder of Local Tech Wire and business editor of WRAL.com.

RESEARCH TRIANGLE PARK, N.C. – Money never sleeps, especially profits at high-tech companies where dollars are shifted offshore to avoid U.S. taxes.

So reports Bloomberg in a stunning report that documents how Google (Nasdaq: GOOG) sharply lowered its U.S. tax burden through LEGAL moves known as the “Double Irish” and “Dutch Sandwich.”

Google isn’t alone, either. The tax-avoidance shuffle team also includes Apple, Microsoft, IBM and Oracle.

Plus, Bloomberg notes that Facebook plans a similar strategy.

"The earnings wind up in island havens that levy no corporate income taxes at all," Bloomberg says.

Interestingly, just this week Oracle’s president co-authored an OpEd article in the Wall Street Journal with Cisco Chairman and CEO John Chambers calling for lower taxes on profits made overseas. If the U.S. rate was lowered from 35 percent, the execs claimed a trillion dollars would no longer be “parked” offshore, as the term describes it, but “repatriated” home.

The execs said the money would then be used to expand hiring, research and development, and help stimulate the stagnant U.S. economy. (Read The Skinny's report here.)

The Bloomberg article goes to great lengths to describe the steps companies take to avoid U.S. taxes.

The focus is Google. The Skinny shared some of the highlights of the article with a colleague who hadn’t read the story. His first reaction: Google’s “Don’t be evil” code for its employees.

The same point is made in the Bloomberg report:

“The company, which tells employees ‘don’t be evil’ in its code of conduct, has cut its effective tax rate abroad more than its peers in the technology sector: Apple Inc., the maker of the iPhone; Microsoft, the largest software company; International Business Machines Corp., the biggest computer-services provider; and Oracle Corp., the second-biggest software company. Those companies reported rates that ranged between 4.5 percent and 25.8 percent for 2007 through 2009.”

Be sure to read this fascinating article.

How many other C-level executives conference called each other to set up meetings to discuss the “Double Irish” and “Dutch Sandwich” over lunch?

Most in-the-know CFOs are probably already dining on these already.

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Tags: IBM, Apple

The Skinny

WRAL Local Tech Wire Publisher and Editor Rick Smith dishes out tidbits from the local technology sector. Read more articles…

WRAL Tech Wire