Google slugged in $3 billion ATO crackdown

GOOGLE, Apple and Microsoft are among seven multinationals being hit with massive tax bills as the ATO exercises its beefed-up powers.

The ‘Google tax’ is here. Picture: Justin Sullivan

GOOGLE, Apple and Microsoft are among seven multinationals being hit with massive tax bills as the ATO exercises its beefed-up powers.

The Taxation Office has today confirmed that it has slugged the companies with a combined $2.9 billion worth of tax liabilities amid an unprecedented crackdown on offshore entities.

Revenue and Financial Services Minister Kelly O’Dwyer said the move was part of a tough new approach by the Turnbull Government, which promised to strengthen the ATO’s powers in response to public outrage over the big profits being raked in by companies that paid little or no tax.

“The Australian people expect all corporations to pay the right amount of tax and this includes multinational companies,” Ms O’Dwyer said.

“Everyday Australians pay their tax, they can’t avoid it, so it is absolutely right that any large corporation that is not paying the right amount of tax should be vigorously pursued by the ATO through the court system.”

Treasurer Scott Morrison declared Australia to be “one of the toughest, if not the toughest, anti-avoidance tax regimes in the world”, adding: “multinational companies are being put on notice.”

Last month, the Treasurer told journalists that Google had already started recording all advertising revenue earned Down Under on its Australian books instead of offshore, as promised when the new laws — dubbed the “Google tax”— were enacted.

‘Multinational companies are being put on notice.’ Picture: Kym Smith

The ATO is now in the process of auditing a total of 59 multinational corporations, along with hundreds of other companies, to ensure compliance with Australia’s taxation laws, including those aimed at preventing tax avoidance through the use of offshore accounts and complex business structures.

A special taskforce of 1000 accountants, lawyers and economists has been examining the books of suspected tax cheats, with 71 company audits under way including at least seven multinationals — four of them in the e-commerce space, and three in the energy and resource industries.

Among them is Rio Tinto, which said in a statement that the ATO had issued it with amended income tax assessments requiring it to pay an extra $447 million, including interest.

The London-based mining giant denied avoiding tax and said it had already paid $25.5 billion in taxes and royalties to the Australian Government, arguing that the new assessment amounted to “double taxation”.

“The issue in dispute is the pricing of certain transactions between Rio Tinto entities based in Australia and the Group’s commercial centre in Singapore,” the statement said.

The ATO, which expects some of the companies to settle and other to fight their tax bills in the Federal Court, declined to say how much it planned to spend on what is likely to be a protracted legal dispute.

A spokeswoman for Ms O’Dwyer’s office said the crackdown aimed to help ensure the government could “sustainably fund the services Australians rely on”.

The tax avoidance taskforce, promised in last year’s Federal Budget, was assembled as the news broke of the Panama Papers, in which the International Consortium of Investigative Journalists exposed the secretive tax dealings of the global elite.

They revealed details of hundreds of thousands of offshore entities with offshore bank accounts — controlled by politicians and alleged drug dealers — contained in millions of leaked documents hacked from the Panamanian law firm Mossack Fonseca.

Google declined a news.com.au request for comment.

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