Italian tax police probe Google Italy again

ROME Thu Nov 29, 2012 12:42am IST

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ROME (Reuters) - Italian police launched a new tax probe into Google Italy (GOOG.O) this week after earlier investigations found the group had failed to declare income and still owed sales tax, an economy ministry document showed on Wednesday.

The earlier probe, which was launched by Italian financial police in 2007, found that Google had developed a system to transfer profits from its Italian operations to Ireland so it could benefit from a more favourable tax regime.

The investigation is the Internet search giant's latest entanglement with European tax authorities, following problems in France and Britain over its Irish strategy.

In Italy, investigations of the years 2002-2006 found that Google had failed to declare at least 240 million euros of income to authorities and owed more than 96 million euros in sales tax, according to the ministry's response to questions in parliament.

It said police had launched a new probe on Monday to check the company was meeting its fiscal obligations in Italy.

Google said in a statement that it complies with tax law in every country in which it operates.

"We are confident we comply with Italian law," a spokeswoman said, adding the firm would cooperate with authorities and answer any questions for the investigation.

Italian officials have stepped up tax surveillance and collection efforts in recent months as part of government efforts to bring Italy's huge public debt under control.

Police have also been assessing the practices of other multinational online businesses who are managing to shift profits made in Italy into countries where they can pay less tax, the ministry said.

(Reporting By Danilo Masoni, Giuseppe Fonte and Catherine Hornby; Editing by Mike Nesbit)

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