|Google Appliance as shown at RSA Expo 2008 in San Francisco. It was only a computer case with no parts inside.-Daniel A (Photo credit: Wikipedia)|
Both the US and the UK government have frowned upon this method of tax avoidance, perhaps because both countries are fighting huge deficits at the moment. A recent move which may go some way towards dealing with these tax avoidance measures is one by the European Union to blacklist certain tax havens, and to promote anti abuse rules.
Most European governments disapprove of the tax avoidance strategy that Google and other companies have adopted, according to Richard Murphy, of UK based Tax Research LLP. He went on to say that either services will need to be scaled back, or other taxpayers will somehow have to pay more to compensate for Google's non payment of their taxes.
On the other hand, Google points out that it has invested in several European countries with great success, and that it is complying with all the tax laws. In addition, Google has invested heavily in east London tech companies and currently has around 2,000 employees in the UK.