Some companies keep their money outside the country in order to not pay taxes. This is not the newest thing in the financial world, nor an uncommon practice, especially among large companies that make billions and want to keep everything for themselves.
Tech companies are doing it too, but recently, Google received an unexpected attention from the Securities and Exchange Commission. They started asking the tech giant a lot of questions regarding its overseas cash and in the last two days the answers started popping up.
First and foremost, it seems that Google keeps money outside the U.S. and the balance shows it is not coffee money: we are talking about an average of $30 billion. The SEC regulators pressed Google to explain their plans related to that amount and the findings are as clear as possible. It seems that Google is set to make a wide series of foreign acquisitions. This means foreign companies, tech rights, offices for itself and so on. Specifically,
The company is likely to require $20 billion to $30 billion of foreign earnings to fund such acquisitions. The company also needs $2 billion to $4 billion for capital expenditures, including data centers and other operations, as well as $12 billion to $14 billion for a research-and-development cost-sharing agreement.
However, Google’s officials didn’t specify a list of potential acquisitions and they didn’t give the SEC inspectors reliable data regarding time – frames and deadlines related to the shopping spree it intends to embark on.
Google investing in foreign companies and offices is not a thing of the present and definitely not a new strategy either. If you remember, Google bought an Israeli – based company for more than $1 billion last year, not to mention that in the past 10 years, Google spent almost $27 billion in buying U.S. based companies, start-ups and tech rights. From this point of view, the fact that Google keeps money outside the U.S. seems completely legit.
However, if you take a look over the dark side of things, it seems that Google keeps money outside the U.S. in order to avoid paying taxes.
The company generates around half of its revenue abroad, and avoids paying taxes in the U.S. by keeping those earnings overseas.