Tokyo tax authorities have found that Google Japan failed to declare about ¥3.5 billion in income for 2015, a source close to the matter said Tuesday.
The authorities are believed to have determined that the Japan unit of the American tech giant reduced its income by shifting locally derived ad revenue to Google’s branch in Singapore, where tax rates are lower.
The Japanese unit has already paid back taxes and penalties amounting to some ¥1 billion, the source said.
Although the unit sold advertising and offered consulting services domestically, payments by its clients were allegedly made to the Singapore entity.
The Japan unit received remunerations equal to its total business expenses plus an 8 percent commission from the Singapore office, according to the source.
