Roundup: Italy opens up 248 mln dollars probe into search giant Google

In the latest signal of the shifting landscape of international tax policies, Italy has opened up a high-profile 227.5 million euros (248 million U.S. dollars) tax probe into California-based Internet search giant Google.

Revenue for Google, along with a host of other, mostly U.S.-based, tech giants like Facebook, Amazon, Apple and eBay, is notoriously hard to track across boarders. As they operate internationally, it is relatively easy for the companies to make it appear that they generate more of their income in countries with low tax rates, and less of it in high-tax countries, including Italy.

Based on at least some interpretations of existing tax laws, experts said, these practices have some legal standing.

"Most countries are still trying to confront this 21st century problem with tax laws dating back 30 to 50 years," Oliviero Fiorini, an economic analyst with ABS Securities in Milan, told Xinhua. "These are not cases of a company producing a product on one country and driving it across a boarder to sell it in another. Tax laws are evolving to confront these new problems."

In the investigation against Google, which is a subsidiary of Alphabet Inc., prosecutors and tax officials charge Google underpaid taxes on royalties by an estimated 200 million euros between 2009 and 2013, and that it failed to declare an additional 100 million euros in revenue from its Italian operations. That revenue would have yielded a tax bill of 27.5 million euros.

In Italy, it is not possible to conduct a criminal investigation into alleged wrongdoing by a company or other entity; it must focus on specific individuals.

So Italy has named five Google officials in its probe: Google-Ireland lawyers John Thomas Herlihy, Graham Law and Ronan Aubyn Harris, John Kent Walker who worked at Google-Italia from 2010 to 2012, and Daniel Lawrence Martinelli, Google-Italia's current president, who took over in 2012.

Google is not unique in Italy. In December, Apple settled a similar tax investigation with Italian officials, agreeing to pay 318 million euros in back taxes.

According to Francesco Brandi, a former tax agency official and a law professor at La Sapienza University in Rome, the cases against Apple and Google have little to do with any specific missteps the companies took and more to do with cash-strapped governments finally cracking down on what has become a common practice among big multinational Internet companies.

"All multinationals should be paying attention to what is happening in Italy and elsewhere in Europe," Brandi said. "This kind of investigation will only become more common over time." Endit