The Australian arm of search giant Google was hit with a $7.1 million tax bill in the 2013 financial year, just 15 per cent of its $46.5 million in pre-tax profit.
In the 2012 financial year Google booked revenue of $268.9 million and a profit of $31.3 million.
The results, which also showed Google Australia paid a $43.4 million reimbursement to its parent company, were revealed in documents filed with the Australian Securities & Investments Commission today.
Google is one of a handful of multi-billion-dollar corporations, including Apple Australia and Microsoft, that have been criticised in recent years for taking advantage of overseas tax havens.
The companies have frustrated governments by using accounting practices that allow them to shift profits to subsidiaries in tax-friendly countries such as Ireland and Bermuda to minimise payments.
Like several other tech firms, Google has a regional headquarters in Ireland, where it records the bulk of its revenue. This allows Google to considers units in other countries as service providers that offer marketing and support to the Irish unit.
Google Australia, for example, does not count revenues earned from its search business in its local profits, which is estimated to bring in more than $1 billion each year. For tax purposes, Google’s search business customers get billed in Singapore, not in Australia.
In similar tax friendly arrangements, Apple too is able to avoid big tax bills by basing its headquarters in Ireland. The Ireland-based Apple Sales International then charges global affiliates like Apple Australia for the intellectual property behind devices such as the iPhone.
Those tax practises allowed Apple Australia to pay only $36.4 million in tax in the 2013 financial year despite posting record revenues in excess of $6 billion.
Google and Apple have consistently argued that they comply with the tax laws in every country they operate in.
However, that has not stopped governments from around the world trying to crack open the secretive tax practises of these technology giants.
Recently French tax officials delivered to Google a “tax assessment” that could potentially force the company to pay as much as EUR1 billion in back taxes for several years over the past decade.
Google disclosed the assessment in a securities filing last Thursday, but didn’t specify the amount.