The Revenue Commissioners are examining the tax affairs of Google, the corporation behind the eponymous internet search engine, write Colm Keenaand John McManus.
According to documents filed by Google with the United States regulatory authorities, the company's 2002 to 2006 tax years "remain subject to examination by the appropriate governmental agencies for Irish tax purposes". Informed sources said that this could only be a reference to the Revenue Commissioners.
A spokesman for Google's Irish operations, which employ 650 people, refused to comment on the examination other than to say: "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."
Last year, the US Internal Revenue Service negotiated a deal with Google that limits the tax savings its can make via its Irish subsidiaries. The company has saved millions in tax by routing profits through its Irish subsidiaries to avail of lower tax rates.
The most recent disclosure indicated that the Irish tax authorities may also have an issue with some aspects of Google's tax planning. Last year Google's main Irish operation paid €3.3 million in Irish tax.
The agreement with the US authorities is aimed at slowing or halting a fall in Google's global effective tax rate. The deal, which concerns Google's intercompany transfer-pricing arrangements, is backdated to 2003.
In the company's most recent filing - in which the Irish examination was disclosed - Google said its 2003 to 2006 tax years "remain subject to examination by the IRS for US federal tax purposes".
Because Ireland's corporation tax rate is half that of the US, American multinationals can reduce what they call their "effective tax rate" by locating more profits here than in the US. The US revenue seeks to ensure that the advantages US multinationals gain from subsidiaries in lower-tax jurisdictions do not exceed what is appropriate.
Google has several subsidiaries in Ireland. The main one, Google Ireland Ltd, is the largest outside the US and looks after the group's European business.
In 2006, it had a turnover of €3.3 billion and made a profit of €17.3 million. It paid €3.3 million in tax. It is a subsidiary of an unlimited company called Google Ireland Holdings, which is owned by Google Inc via an intermediary in the Bahamas.
The four directors of Google Ireland Holdings are a lawyer, a treasury and risk manager, a tax director and an international tax manager. All four are US-based.