Search engine giant’s settlement brings to $1.25bn the amount collected from ecommerce players including Microsoft, Apple and Facebook

This article is more than 9 months old

This article is more than 9 months old

The search engine giant Google has agreed to pay $481.5m to the Australian Tax Office in a major win for the agency in its battle to force big technology companies to pay tax in Australia.

The settlement, which covers a decade’s worth of tax between 2008 and 2018, will also help bolster a federal budget surplus that has been undermined by weak economic growth and the collapse of the Morrison government’s robodebt scheme.

It follows a lengthy campaign to get multinationals, especially technology and resources giants, to pay tax in Australia that was launched in 2015 by the then treasurer, Joe Hockey, and spearheaded by the tax commissioner, Chris Jordan.

Moves included more audits of tech and resources companies through a special ATO taskforce and introducing a suite of laws designed to force tech companies to book sales made in Australia locally, rather than running them through a tax haven such as Singapore or Ireland.

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The ATO said Google’s settlement, together with others made by companies including Microsoft, Apple and Facebook, brought the total extra amount of cash collected from ecommerce industry players to $1.25bn.

Deputy commissioner Mark Konza, who has overseen much of the ATO’s work dealing with tax-shy multinationals, said the settlement was “another great outcome for the Australian tax system”.

“It adds to the significant success of the ATO in positively changing the behaviour of digital taxpayers and significantly increasing the tax they pay in Australia,” he said.

The life of the tax avoidance taskforce had been extended until 2023, ensuring “that the ATO is able to continue to pursue these issues and provide assurance to the community that we are doing everything in our power to protect Australia’s tax base”.

A Google spokeswoman said that as well as settling the company’s back tax the deal would “also provide certainty in relation to future tax treatment”.

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The company formerly operated by billing Australian customers through its branch in Singapore while insisting its local office merely performed services for the global group.

This structure meant that revenue from Australian customers, estimated at the time to be about $2bn a year, never touched the local company.

As a result Google Australia made little or no profit on which it could be taxed by the ATO.

However, in 2016 after the introduction of the multinational anti-avoidance law by the Abbott government, Google restructured its business.

The Australian company became a reseller of the group’s services, bringing some of the revenue stream onshore and under the ATO’s umbrella.

Jason Ward, principal analyst at the union-backed Centre for International Corporate Tax and Research, said the settlement was “great news”.

“There is no doubt that the ATO collects more of what is owed from these tech giants than most other global tax authorities; they do a great job,” he said.

But he said more reform was urgently needed to end tax avoidance.

“The system is still rigged and in urgent need of reform,” he said.

“Australia should step up and help push meaningful and fair global tax changes.”