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Tax changes target large corpor...

Tax changes target large corporations

In a dramatic change to the Australian taxation system, tech giants Google and Facebook are now paying tax based on a number of revenues which they generate in the country. In the past, they have moved their taxable income offshore to a territory where the rates are significantly lower. 

Scott Morrison, the Australian Treasurer, announced to parliament that the changes in the law would generate an extra 2 billion dollars for the economy – though not all of this will come from Google and Facebook. Morrison also said that he has provided the authorities with "the power, the resources and the penalties to get the job done".

According to the minister, Facebook, among a number of other companies, are now declaring their taxes in Australia rather than in Ireland as they were doing before the change in the law. 

The new law, which has been dubbed as 'the Google tax', will affect all companies who generate more than a billion dollars per year in revenues. While the law was being debated back in 2015, the government said that there were over 30 companies in Australia who were avoiding paying tax and instead rerouting their profits to Ireland. The country is known for having the second lowest tax rates in the European Union. 

Other companies such as Microsoft and Amazon also have their headquarters in the country. There are several debates currently occurring in Europe in a bid to finally crack down on the international tax systems. 

All information provided is of a general nature only and does not take into account your personal financial circumstances or objectives. Before making a decision on the basis of this material, you need to consider, with or without the assistance of a financial adviser, whether the material is appropriate in light of your individual needs and circumstances. This information does not constitute a recommendation to invest in or take out any of the products or services provided by SMATS Services (Australia) Pty Ltd or Australasian Taxation Services Pty Ltd.

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