The Albanese Government who are looking to rake in additional billions to prop up the Australian economy which is tipped to face an inflation crisis next year, should look no further than the likes of social media and search companies who are raking in billions but paying little in tax claim observers.
Last year Google paid less than 5% tax while Australian businesses are paying up to 30% and individuals a marginal tax rate of 34%.
As the Albanese government ramps up plans to force the biggest multinationals to hand over a “fairer share” of tax here, it’s been revealed that Google Asia Pacific’s 2021 tax bill was just A$232m on a profit of $4.37bn.
Google’s Australian operation generates the bulk of the revenue in the Asia Pacific region according to documents filed in Singapore and accessed by News Corporation.
The effective tax rate of 5.3 per cent is seen as a “joke” according to observers with new Australian Treasurer Jim Chalmers now being urged to take an immediate look at how Australia can force the likes of Facebook, Amazon, and Google to pay more in taxes.
Google has offices that control the region in Singapore where Singapore’s standard corporate tax rate is 17 per cent, but Google pays much less because of a special deal that lowered its liability by nearly half a billion dollars last year alone according to News Corp publication The Daily Telegraph.
Financial statements filed in Singapore and obtained by the News Corp publication show Google Asia Pacific’s income tax bill at the full rate would have been A$743m.
But this was slashed by a total of A$511m, mainly due to the “effect of tax exemption and rebates”, which reduced the company’s liability by A$490m.
The effective tax rate paid by Google Asia Pacific is about one-sixth of Australia’s standard 30 per cent rate.
Sydney-based Google Australia’s latest financial statements say its main business is to “facilitate the sale” of advertising and “cloud” services between Google Asia Pacific and customers “for which (Google Australia) earns a commission with most of their revenue being shipped off to Singapore.
Treasury recently opened consultation on implementing an OECD agreement that could result in a higher tax, but observers are concerned that this could get delayed.
If the agreement is adopted by enough countries, 100 of the globe’s largest companies will have a quarter of their “residual” — meaning particularly high – profits reallocated among countries including Australia, which can then be taxed.
A spokesperson for Treasurer Jim Chalmers said “when it comes to tax, our focus is on ensuring that multinationals pay a fairer share.
“We’re working with international partners to put in place policies to make this happen.”
A Google spokesperson said it has “long been supportive of international tax reform and negotiations within the OECD framework” while complying with tax laws in all countries in which it operates.