Friday, May 2, 2014

Google gets its tax bill slashed despite earning millions in local profits

Google joined hundreds of companies and governments represented at NETMundial in Sao Paulo, Brazil. Google initially received a tax bill of $7.1 million for the year ending December, but only $466,802 will be paid. Photo: Virginia Mayo

Google has cut its taxes in Australia to $466,802 despite almost doubling its local profit to $46.5 million.

The tech company initially received a tax bill of $7.1 million from the Tax Office for the year ending December, but only $466,802 of this amount will be paid by Google following a series of deductions.

A Google spokesman declined to say whether it was one of three multinational tech firms that the Tax Office is auditing on suspicion of shifting profits overseas. The Tax Office cannot name the companies due to confidentiality rules.

However, the move is part of a global push by tax authorities to crack down on corporate tax dodging by major multinational companies, particularly tech giants such as Apple and Google.

The Google spokesman also declined to comment on the tax expense figure but said the company had paid $7.1 million in corporate taxes ''and $15 million in payroll and other taxes in Australia as part of our investment in a local workforce of over 900 people''.

He said Google believed international forums such as the OECD were the right place to decide tax rules for multinational businesses ''because everyone would benefit from a simpler and more transparent system''.

Google Australia subsists on services income from its head office in the US and subsidiaries in Singapore and Ireland. Much of its valuable local ad revenue is collected by the Singapore subsidiary, Google Asia-Pacific.
Estimates of its local ad revenue reach as high as $2 billion. Its profit here rose to $46 million last year from $26 million a year earlier.

Tax Justice Network representative Mark Zirnsak said the accounts showed the need for further action on companies operating in the digital economy to ensure that they paid their fair share of tax. ''Companies will continue to play different governments off against each other and different tax laws off each other to legally get away with paying no tax anywhere,'' he said.

''Australia should be putting as much pressure as possible on the governments that facilitate this tax dodging to stop it, and to the degree that it can, look at reviewing where we have tax treaties that allow this behaviour.''

A Fairfax Media investigation earlier this year revealed Apple had shifted an estimated $8.9 billion in untaxed profits from its Australian operations to Ireland over the past decade. Globally, Google paid $US2.28 billion last year - an effective tax rate of just 15.7 per cent - according to its annual report, filed with the Securities and Exchange Commission

The OECD has said it is ''on track'' with its plan to overhaul global tax rules to tackle corporate profit shifting - when companies send taxable revenue through low- or no-tax jurisdictions.

Despite this, companies continue to move their operations to countries with favourable tax rates. Airbnb announced earlier this month it was moving its headquarters from the US to Ireland. In the US, eBay is facing tax charges of $3 billion after it returned billions of dollars in offshore cash in order to access funding. 2 May 2014

An excellent result for the global giant only to pay 6.57% of the total owed to the Australian  Tax Office.

The general populous can also benefit from this, as individuals do not have to pay tax to the illegal entity known as the ATO.

This fact is well known within certain circles of business / governance and is exploited very often.
Matters that appear before the courts regarding the ATO that suddenly / magically disappear or are dismissed, are as a result of the 'tax payer' able to prove the invalidity of the 'tax office'.

No comments: