Technology

Google to pay A$481.5m in major win for Australian Tax Office

Search engine giant’s settlement brings to A$1.25bn the amount collected from ecommerce players

Photograph: Wallace Woon/EPA

Ben Butler
Wed Dec 18 2019 - 07:48

Google has agreed to pay 481.5 million Australian dollars to the Australian Tax Office in a major win for the agency in its battle to force big technology companies to pay tax in Australia.

The settlement, which covers a decade’s worth of tax between 2008 and 2018, will also help bolster a federal budget surplus that has been undermined by weak economic growth and the collapse of the Morrison government’s robodebt scheme.

It follows a lengthy campaign to get multinationals, especially technology and resources giants, to pay tax in Australia that was launched in 2015 by the then treasurer, Joe Hockey, and spearheaded by the tax commissioner, Chris Jordan.

Moves included more audits of tech and resources companies through a special tax office taskforce and introducing a suite of laws designed to force tech companies to book sales made in Australia locally, rather than running them through countries haven such as Singapore or Ireland.

READ MORE

The tax office said Google's settlement, together with others made by companies including Microsoft, Apple and Facebook, brought the total extra amount of cash collected from ecommerce industry players to A$1.25 billion.

Deputy commissioner Mark Konza, who has overseen much of the tax office's work dealing with tax-shy multinationals, said the settlement was "another great outcome for the Australian tax system".

“It adds to the significant success of the Australian Tax Office in positively changing the behaviour of digital taxpayers and significantly increasing the tax they pay in Australia,” he said.

The life of the tax avoidance taskforce had been extended until 2023, ensuring “that the tax office is able to continue to pursue these issues and provide assurance to the community that we are doing everything in our power to protect Australia’s tax base”.

A Google spokeswoman said that as well as settling the company’s back tax, the deal would “also provide certainty in relation to future tax treatment”.

The company formerly operated by billing Australian customers through its branch in Singapore, while insisting its local office merely performed services for the global group.

This structure meant that revenue from Australian customers, estimated at the time to be about A$2 billion a year, never touched the local company.

As a result Google Australia made little or no profit on which it could be taxed by the Australian Tax Office.

However, in 2016 after the introduction of the multinational anti-avoidance law by the Abbott government, Google restructured its business.

The Australian company became a reseller of the group’s services, bringing some of the revenue stream onshore and under the tax office’s umbrella. – Guardian News and Media 2019

LATEST STORIES