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‘Google-tax’ likely to go ahead as support builds in Senate

21 May 2018 1 minute readShare

In his budget speech, Scott Morrison flagged the idea of the so-called Google-tax for Australia, a crackdown on global tech-giant tax avoidance in the digital economy, which, with support now building in the Senate, seems very likely to go ahead.

The SMH is reporting that the new tax on digital giants including Google, Facebook and Uber has won support from crucial Senate crossbenchers.

It says this could clear the way for two Turnbull government flagship economic policies worth $175 billion, after “influential” independent senators disclosed to Fairfax Media that a digital tax would help sway their votes.

Scott Morrison has confirmed a tax targeting some of the world's largest and most popular companies is now inevitable, and Labor has provided in-principle support for a crackdown on digital companies.

Labor's shadow assistant treasurer, Andrew Leigh, said the opposition backed taxing the digital economy but was concerned a stop-gap measure could become permanent.

According to The Australian, Centre Alliance senators Rex Patrick and Stirling Griff, whose votes are expected to determine whether the Prime Minister’s signature economic reform becomes a reality, said the proposed crackdown on international technology companies could help secure their support for the corporate tax cuts bill.

Dating back to Nick Xenophon’s leadership of the grouping, Senator Patrick said Centre Alliance had a strong interest in ensuring companies such as Google and Facebook paid more tax. He said it was clear that big digital and technology companies were not paying enough tax in Australia.

Google Australia reported revenue of $1 billion last year. It posted a profit of $125 million and paid $37 million in tax on a total profit of $125 million. Facebook Australia made $476.8 million in revenue in 2016, but reported a loss of $9.6 million.

According to The Australian, Senator Griff said he believed government’s plan would be to mirror efforts by the EU for large tech companies to pay a 3 per cent tax on the money they make from user data or digital advertising where the revenue is earned, regardless of their actual presence.

The approach differs from current rules, with companies taxed where they make their profits, which has encouraged digital economy players to shift their profits to low-tax jurisdictions.

The SMH said Mr Morrison is growing frustrated at global delays on the issue and is now prepared to go at it alone.

It said government sources believe this “interim measure” is more likely to become a medium-term fix, because of the difficulty of getting Chinese and US tax offices to participate in a global assault on the digital companies.

‘Google-tax’ likely to go ahead as support builds in Senate
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