Aggressive tax planning in the digitalized economy and the Google case study

Abstract

The management models of large companies are biased towards meeting certain objectives aimed at making economic operations viable and increasing profits. Among the strategies used is the structuring of tax planning with the aim of obtaining the lowest tax burden possible. Special emphasis is placed when tax planning is carried out by companies that operate in the digitalized economy scenario, as this is surrounded by a scenario of innovations that raise the level of sophistication of operations aimed at tax optimization and generate a revenue loss for companies. Tax administrations, so-called aggressive tax planning. A practical example is the case of Google, which used procedures authorized by the laws of the countries in which it had its subsidiaries and procedures to conceal the tax authorities in order to obtain the lowest revenue, which resulted in questions from the French and Italian tax authorities. The objective of this article is to understand what aggressive tax planning means and how, more specifically to highlight the impacts of the digitalized economy on tax optimization based on the Google case study. The method used is deductive, in which the study of general aspects of tax planning and also of international tax planning will be carried out in order to guide the analysis of the specific case and the conflicts generated between the company and governments. It is concluded that Google's tax planning is a demonstration of how companies in the digital sector take advantage of legislation and their own economic activity to significantly reduce their tax burden and cause a decrease in government revenue, which affects several sectors of society, economy and politics.