Unpaid tax - will Google pay back millions to Australia?

25 January 2016
Image from Google

Hot on the heels of Google agreeing to pay £130 million back in unpaid taxes in the UK, questions have been raised over whether the US multinational will now fork out tax it owes in other countries.

A Google spokesperson says it will now pay tax based on revenue from UK-based advertisers, which reflects the “size and scope” of its UK business.

Following the payout, independent senator for South Australia, Nick Xenophon, says the news that Google has agreed to pay more than $260 million in back taxes to the UK government “begs the question – how much does Google owe the Australian Government if it hasn’t been paying its fair share of taxes here?”

In a statement on his website he says: “I just hope the Australian Tax Office (ATO) search for any missing Google tax millions is as powerful as the Google search engine."

Xenophon adds he would be “gob-smacked” if there isn't a similar claim against Google in Australia given the UK settlement, and France lodging a claim for more than $1.5m in back taxes against Google.

According to FT Weekend, Google paid just £20.5m in tax in 2013, despite raising $5.6bn in revenues in the UK. HMRC had been investigating if Google avoided paying tax by allocating profits to Ireland, the home of its European operations.

Following a tax avoidance inquiry in Australia last April involving Google, Apple, Microsoft & News Corp, it was revealed Google Australia earned $358m in revenue in that last financial year. With a profit of $46m, it paid $7.1m in taxes - with Google saying it pays the majority of its taxes in the US as the US takes the majority of its R&D risk.

During the enquiry Senator Sam Dastyari said he found it “extraordinary” that neither Apple nor Google could answer questions on international tax arrangements.

“It's my understanding of the evidence from Google that if I click on an ad, they don't even report that income in Australia – it's reported in another jurisdiction. It's reported in Singapore,” Dastyari said at the time.

Last year the UK's budget chancellor George Osborne announced the introduction in April of a so-called "Google tax" targeting firms that move their profits overseas.

With Google now paying up a chunk of tax in the UK, it begs the question if it will now look to square its debts here in Australia.

Taking to Twitter this weekend, Osborne said: “#Google tax bill is a victory for the action we've taken. I introduced Diverted Profits Tax. We now expect to see other firms pay their share.

“Good to see #Google paying more tax on past profits. We want successful businesses in the UK - but they should pay their taxes.”

In March last year the then communications minister Malcolm Turnbull signalled a move for the government to start charging GST on online advertising, a move aimed at internet giants Facebook and Google which are broadly seen as paying far less in tax than many believe they are liable for.

Speaking to media at the time, Turnbull said he would move for the tax to be imposed on the internet giants because of growing unease about how little tax the multinationals pay in Australia.

“The Australian media industry is under enormous pressure from online platforms, notably Facebook and Google,” he said.

“The modest amounts of company tax both companies pay in Australia has been a matter of great concern, here as well as in other countries, and there is a global discussion going on about how these internet-age companies should be taxed in a manner that delivers a fair return to the countries where they make most of their money.”

In December 2015 the ATO made public its list of companies operating in Australia which failed to pay tax in 2013-14. David Jones. Foxtel Cable TV, Ten Network were just three of the household media names which registered a startling blank next to taxable income and tax payable on thenewly-issued ATO list.

Media and marketing organisations, as well as some of the larger consumer brands that AdNews reports on, listed as having a blank space in 'tax payable' included: APN News and Media; Nova Entertainment; David Jones; IbisWorld; Foxtel Cable TV; Fremantle TV; Mondelez; News Australia/News Pay TV/News Investments; Qantas; Ten Network Holdings and Vodafone.

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