China Punishes Google Sub-Units For Tax Evasion

Chinese authorities have investigated and punished three Google sub-units operating in the country for tax violations.

A Chinese newspaper, The Economic Daily, has claimed that the three Google units were in violation of Chinese tax laws and that the government had launched additional investigations against other "Google enterprises in China", according to a report on Reuters.

The news will have have a negative impact on the already strained relationship between Google and China. Recently things have been especially tumultuous after Google had accused the Chinese government of collaborating with hackers to sabotage Gmail in China.

Google, meanwhile, confirmed that the three companies were sub-units but refuted the tax violation allegations made by the newspaper.

“We believe we are, and always have been, in full compliance with Chinese tax law,” a Google spokesperson said in a statement to Reuters.

Large organisations operating in multiple countries usually tread carefully when it comes to adhering to the tax laws of countries they are operating within.

The three Google units at the centre of the controversy are Google Information Technology (China) Co, Ltd; Google Advertising (Shanghai) Co, Ltd, and Google Information Technology (Shanghai) Co, Ltd. The companies were accused of using fake invoices among other things, involving figures in the region of 40 million yuan or $6 million.