ZURICH Jan 25 Tax authorities in Zurich are
demanding that Google pay more tax, a Swiss newspaper
reported on Friday, citing undisclosed sources with knowledge of
A decision by Zurich to open talks with Google may indicate
that Switzerland intends to take a tougher stance on
multinational companies which have minimised their tax bills by
chanelling revenues through low-tax jurisdictions.
Zurich, where Google runs its largest office outside of the
U.S., gets "virtually no" corporate tax from the internet search
giant, and is negotiating a higher tax level, according to
Friday's edition of Tages-Anzeiger.
Google could not be reached for comment. Tax authorities in
Zurich said they could not comment on individual companies.
Firms like Google, Starbucks and Vodafone
are being steadily targeted by governments scrambling to mend
holes in their budgets caused by the financial crisis.
Switzerland is also coming under pressure from the European
Union (EU) to ensure multinational companies are paying an
appropriate rate of tax.
The Alpine state, which is not part of the EU, has been
criticised by Brussels for allowing cantons, or states, to give
favourable tax rates to multinational firms providing they meet
certain local criteria such as job creation.
Zurich's reported talks with Google follow an agreement by
Brazil's Vale SA, the world's second largest miner by market
value, to pay 212 million Swiss francs ($232 million) to the
Swiss federal government, and 663 million reais ($317 million)
to Brazil's Minas Gerais state, to settle tax cases dating back
Switzerland has previously refuted the EU claim that its
cantonal tax system amounts to unauthorised state aid.
Zurich tax authority director Bruno Faessler told Reuters
that while different Swiss cantons were free to set the rates of
corporate tax they applied, he denied they are negotiated with
"Companies are taxed on their net profits and their capital
if their head office is in Zurich," he said.
"If not, profits of their branches and their properties in
the City of Zurich are subject of taxation."
On Thursday France said it will seek payment of back taxes
from big internet companies who have used legal loopholes to
reduce their tax bill.
French authorities are currently conducting a tax probe of
Google and retail search engine Amazon.