Google accused of slashing $3billion from its tax bill through 'Double Irish' technique

Google was today accused of avoiding paying tax by funnelling its profits through low-tax countries.

In a series of complicated transactions known as a Double Irish or a Dutch Sandwich, the internet giant has managed to pay just 2.4 per cent of its overseas gains in tax.

The loopholes - which are legal - saved Google $3.1bn over three years by diverting cash through low-tax nations such as Ireland, the Netherlands and Bermuda.

Double Irish: By sending its overseas business through Ireland, Google's Dublin office helps the internet giant avoid high U.S. corporation tax rates

In the U.S., the corporate income tax rate is 35 per cent while in Britain, the firm's second-biggest market, it is 28 per cent.

'It’s remarkable that Google’s effective rate is that low,' Martin A. Sullivan told Bloomberg.

The tax economist who previously worked for the U.S. Treasury Department added: 'We know this company operates throughout the world mostly in high-tax countries where the average corporate rate is well over 20 per cent.'

The rate of overseas tax paid by Google was the lowest of the U.S.'s top five biggest technology firms - but it is not alone in using the tax avoiding methods.

Facebook Inc. and Microsoft Corp. are also known to use similar methods.

The use of countries which do not levy corporate income tax is not helping the U.S. Government as it attempts to close a $1.4 trillion budget deficit.

'Google’s practices are very similar to those at countless other global companies operating across a wide range of industries,' said Jane Penner, a spokesman for the Mountain View, California-based company.