Google’s Australian tax bill to reignite ‘Big Tech’ stoush

The search giant paid just $76m in taxes locally despite posting over $5bn in revenues, records show.

Google’s figures are likely to reignite debate over the amount of tax paid by US tech giants. Picture: AFP

US tech titan Google paid just $76m in tax in Australia over the past calendar year, its accounts show, despite the $2 trillion company booking more than $5bn in revenue from local customers, mostly for advertising payments.

The company’s latest financial report, filed to corporate regulator ASIC, show that Google booked $5.2bn in gross revenue for 2020, up from $4.8bn a year earlier, including $4.4bn worth of advertising revenue.

The figures are likely to reignite debate over the amount of tax paid by US tech giants. Google processes its advertising revenue offshore through Singa­pore, under its Google Asia Pacific arm, meaning it only recognised a pre-tax profit of $239m and paid an income tax of $76m.

According to its accounts, Google’s local revenue last year was $1.393bn, including $189m of hardware revenue, including devices such as Pixel phones and smart speakers. The company has a total market capitalisation of about $2.05 trillion and is the world’s fourth most valuable tech company, behind Apple, Microsoft and Amazon.

It paid its Australian employees a total of $715m, up from $425m a year earlier, and earned total interest income of $2.82m, up from $1.81m a year earlier.

“The group reports revenue from advertising and other service sales net of associated direct cost of sales, as the performance obligation is to facilitate the sale of advertising between Google Asia Pacific and the advertiser, for which the group earns a commission,” the company says in its report. “The group notes that it is the agent in the transaction as it does not control the advertising inventory before it is transferred to the advertiser.”

A Google spokeswoman said the company had invested more than $1bn into its business locally. “In the 2020 calendar year, Google Australia made a pre-tax profit of $239m resulting in a current income tax charge of $76m, and invested over $1bn in our Australian operations,” she said.

The financials predate the recent news media bargaining code legislation, in which Google has agreed to pay Nine $30m for news content annually for five years, and news publishers more than $100m a year overall.

The figures come after Labor backbencher Peter Khalil this week urged his party to do more about multinational tax avoidance, calling for reform to force the likes of Google and Facebook to contribute more to the economy. The Melbourne-based MP said he would lobby for new local taxes on multinationals to return “hundreds of millions of dollars back into our coffers”.

Google’s local advertising practices are also under a cloud amid an ongoing ACCC inquiry into problems with Australia’s advertising technology market.

The regulator in January published an interim report into the matter, warning of a lack of “competition, choice and transparency” in ad tech markets and noting Google had significant monopoly influence over the local $3.4bn industry.

ACCC chairman Rod Sims has previously said Google was “marking its own homework” due to its control of the entire ad supply chain, adding he was open to court action if needed.