Google Australia restructured its business to recognise revenue it earns in Australia, in a move that was effective 1 January this year.
The changes came amid mounting pressure from the federal government to crack down on corporations avoiding their share of tax in Australia. Former treasurer Joe Hockey passed legislation late last year that strengthened Australia’s taxation laws to target approximately 1000 large companies accused of not paying enough tax in Australia.
Under the new laws, companies with a global revenue of more than $1 billion could be hit with fines or additional taxes if found to be illegally offshoring profits.
Google Australia was already one of the companies subject to an audit by the Australian Taxation Office for using low-tax hubs such as Singapore to reduce their taxable income. Industry estimates show that Google’s Australian ad sales funnelled through Singapore could be as high as $2 billion.
The company said in its annual report that it’s unable to estimate what financial impact the changes will have on its 2016 results.
In Google’s financial year ending 31 December 2015, Google paid $16.6 million in income taxes and had a gross profit of $50 million. The company’s revenue was up by $63.2 million to reach $501.8 million for the year.
Net profit was down slightly from $49.2 million to $47.1 million.
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