Australia moves to stymie firms shifting income here
Published 23/11/2012 | 05:00
AUSTRALIA released draft revisions to its tax laws yesterday, which it said were designed to stop big firms, including the local arm of Google, from shifting their income to Ireland.
In Dublin, Finance Minister Michael Noonan dismissed attempts by foreign governments to crack down on aggressive tax avoidance, saying he had not received any complaints.
Australia's latest move is in line with a push by Britain and Germany who want the G20 group of nations to make multinational companies pay their "fair share" of taxes, following reports of large firms exploiting loopholes to shift taxation of their income away from where they are generated.
Australia's Assistant Treasurer David Bradbury said yesterday that his country's tax laws were being revised to ensure that companies pay tax on profits made in the country, citing the case of Google Australia which uses its Irish operations to avoid Australian taxes.
"While the day-to-day dealings of Australian firms advertising on Google might be with Google Australia, under the fine print of contracts Australian firms sign with Google, they are actually buying their advertising from an Irish subsidiary of Google," Mr Bradbury said in a speech to accountants in Sydney.
"It is then argued that the source of this income – and therefore the taxing rights under our tax treaty – would be with Ireland rather than Australia."
Australia's company tax rate is 30pc, compared with Ireland's rate of 12.5pc.
Google Australia would not comment directly on Mr Bradbury's comments, but said that it complied with all local tax laws.
"We make a significant contribution to Australia's economy by helping thousands of businesses grow online, providing services to millions of Australians at no cost, as well as employing 650 people locally," a Google spokesperson said in a statement.
Mr Bradbury said Google's tax structures involved complicated royalty payments to a Dutch subsidiary which is paid back to another holding company controlled in Bermuda, where there is no corporate tax.