Tax rules cut both ways, Google warns Australia

Δημοσιεύθηκε: 8 Απριλίου 2015 - 10:57

Google has warned Australia that its biggest companies could be exposed to retaliatory rules abroad if it follows the UK in cracking down on multinational tax avoidance.

The search engine made the warning on Wednesday at a parliamentary hearing on corporate tax avoidance, which heard that Google, Apple and Microsoft were among a dozen global tech companies under scrutiny.

Google Australia said: "It is tempting for every government to assume that they will benefit from changes to international tax structures; however, any new rules in Australia would have a similar impact on Australian multinationals operating in overseas jurisdictions."

Maile Carnegie, Google Australia's managing director, told the Senate hearing that international co-operation was the best way to tackle the issue. She cited the case of Rio Tinto, the miner, which makes one-third of its sales in China but pays less than 1 per cent of its corporate taxes in that country.

Ms Carnegie said this reflected the fact that Rio's Australian headquarters provided most of the investment and carried most of the risk. It was also why Google paid most of its taxes in the US, she said.

The Senate inquiry is the latest in a string of legislative hearings in the US, UK and elsewhere in response to public anger at tax avoidance strategies used by multinationals at a time when national budgets are stretched.

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>Australia, which has a corporate tax rate of 30 per cent, is at the forefront of global efforts to combat tax avoidance. Last year, it used its presidency of the Group of 20 industrialised countries to promote a plan by the Organisation for Economic Co-operation and Development to update global tax rules. It is part of an international project involving six countries investigating how digital multinationals shift their profits to tax havens.

Joe Hockey, Australia's treasurer, is considering whether to follow the UK and introduce a "diverted profits tax", also known as the Google tax, in his May budget. He has consulted George Osborne, the UK chancellor, about the 25 per cent levy on companies that artificially divert profits generated in Britain to lower-tax locations.

Any retaliatory action on companies such as Rio could be detrimental for Australia. Last year, Rio paid US$5.6bn in taxes and royalties to Canberra from US$47.7bn.

Chris Jordan, Australia's tax commissioner, told the hearing the best long-term solution would be an international tax framework. Mr Jordan said new rules could prompt companies to change their behaviour, suggesting that a diverted profits tax may have some merit.

At the hearing, senators said Google, Apple and Microsoft had set up complex corporate structures designed to minimise their corporate tax bills in Australia.

The senators pointed out that Google's advertising revenue generated in Australia is taxed in Singapore, which has a lower corporate tax rate.

The Australian Tax Office said it was investigating 15 companies with marketing hubs in Singapore over alleged tax avoidance. But it has refused to name the companies, citing taxpayer confidentiality.

Rio, named in Australian media as one of the 15, said its Singapore Commercial Centre entity was not established to reduce tax payable in Australia or any other country.

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