Without seeing the detail of the so-called “Google tax”, as a former assistant commissioner of taxation in the international area of the Australian Taxation Office, it appears to me there is one possibly insurmountable problem, Australia’s double tax agreement with Singapore (“Treasurer poised to impose ‘Google tax’”, AFR, December 9.)
Under that treaty (and all Australia’s tax treaties) Singapore has taxing rights over the income of its resident companies. As a company incorporated there, Google Singapore is subject to income tax in Singapore and not Australia, including on profits which are sourced from Australia.
The exception is when Google Singapore has a permanent establishment (PE) in Australia, for example a branch physically located here.
I understand that when an Australian contracts with Google Singapore (by, for example, placing an advertisement on Google) they do so through a server not located in Australia rather than by dealing directly with its branch here.
This means that our treaties, and indeed all our and other country tax treaties, based as they are on 19th century concepts of physical presence, make collecting tax from Google Singapore almost impossible to do. Without a change to our Singapore, and indeed all the other tax treaties, any income tax imposed on Google by Australia will in all likelihood be invalid under the treaty.
My suggestion is to impose an operating fee on Google and other taxpayers carrying on business in Australia but paying little tax here. Twenty per cent of estimated turnover might be a starting point.
And while I have your attention on tax matters, Treasurer Joe Hockey’s announcement that 10 multinationals have ATO auditors embedded in them is a joke. Only 10? Are the other hundreds of multinationals all squeaky clean?
Further, that doesn’t address the fact that for the last decade the international area of the ATO has been destroyed and its expertise wrecked, lost or dispersed. With 2200 staff cuts so far in the past 12 months (and an extra 2500 planned for the end of 2017), more of that international and audit experience has been or will be lost.
Putting a few auditors into 10 multinationals isn’t going to change that. It is a smokescreen to cover the destruction of international expertise and capacity in the ATO.
This news story is reprinted from www.afr.com
Read more details on payroll services brisbane
Under that treaty (and all Australia’s tax treaties) Singapore has taxing rights over the income of its resident companies. As a company incorporated there, Google Singapore is subject to income tax in Singapore and not Australia, including on profits which are sourced from Australia.
The exception is when Google Singapore has a permanent establishment (PE) in Australia, for example a branch physically located here.
I understand that when an Australian contracts with Google Singapore (by, for example, placing an advertisement on Google) they do so through a server not located in Australia rather than by dealing directly with its branch here.
This means that our treaties, and indeed all our and other country tax treaties, based as they are on 19th century concepts of physical presence, make collecting tax from Google Singapore almost impossible to do. Without a change to our Singapore, and indeed all the other tax treaties, any income tax imposed on Google by Australia will in all likelihood be invalid under the treaty.
My suggestion is to impose an operating fee on Google and other taxpayers carrying on business in Australia but paying little tax here. Twenty per cent of estimated turnover might be a starting point.
And while I have your attention on tax matters, Treasurer Joe Hockey’s announcement that 10 multinationals have ATO auditors embedded in them is a joke. Only 10? Are the other hundreds of multinationals all squeaky clean?
Further, that doesn’t address the fact that for the last decade the international area of the ATO has been destroyed and its expertise wrecked, lost or dispersed. With 2200 staff cuts so far in the past 12 months (and an extra 2500 planned for the end of 2017), more of that international and audit experience has been or will be lost.
Putting a few auditors into 10 multinationals isn’t going to change that. It is a smokescreen to cover the destruction of international expertise and capacity in the ATO.
This news story is reprinted from www.afr.com
Read more details on payroll services brisbane
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