A probe by Italian tax authorities into US Internet giant Google's Italian arm has found it failed to declare income of 240 million euros ($310 million) and pay value added tax of 96 million euros.
Google Italy rejected the accusations, saying it respected tax laws.
The probe was aimed at "ensuring the correct adherence to tax obligations in Italy," the finance ministry said on Wednesday in response to a question from a lawmaker about Google's activities in Italy, Italian media reported.
The ministry said that Google Italy had a contract with Google Inc. and with Google Ireland, the European division, "pretending that Google Italy only had an auxiliary role, which was not at all reflected in the facts."
It said that Google Italy had only declared payments from Google Inc. and Google Ireland and had not reported its entire commercial activity.
Google Italy was quoted by La Repubblica daily as saying: "Google respects the tax laws of all the countries in which it operates."
"We will continue to work with local authorities," it added.
The member of parliament who put the question to the government, Stefano Graziano from the centre-left Democratic Party, said: "This time of such deep economic crisis demands greater force and determination.
"Otherwise Italian companies will be at a definite disadvantage compared to those that are based in countries with a more advantageous tax regime."