Chinese tax authorities have reportedly discovered illegal tax violations during routine audits of three Google China corporate entities. The three companies - Gu Guo Information Technology (Shanghai) Co., Ltd., Shanghai Gou Xun Advertising Co., Ltd., and Google Information Technology (China) Co., Ltd. - are said to have already been penalized by relevant authorities.
According to the rumor, taxation authorities discovered during a routine audit that Google China had issued fake invoices. Tax violations reached an estimated RMB 40 mln, ranging from including "massage fees" as business expenses to illegal withholding of business taxes. Authorities have reportedly already ordered Google to cease these illegal activities and both back taxes and related fines have been paid. Google China is now reportedly being investigated on suspicion of tax evasion.
Editor's Note: According to DoNews, a Google China spokesperson responded to the rumors by stating that Google believes it has always complied with Chinese tax regulations. Google refused to say whether it had begun any internal investigation into the matter. For more background on this topic, please see "Rumor: Google Investigated for Tax Law Compliance" MD 11/19/07 issue.