Facebook and Google now paying full tax, says Australia

The threat of punitive taxes, changes to the law and a great deal of diligence mean that the Australian government will raise an additional 2 billion Australian dollars (£1.2bn) in this tax year on multi-national corporations operating in Australia.

Companies such as Facebook and Google with annual revenues of more than A$1bn have been targeted and are now paying tax in Australia based on profits earned in Australia instead of shifting income abroad, according to the government.

Firms were told if they did not play fair and pay what was due on revenues made in Australia then they would be taxed at a penalty rate of 40%. That seems to have concentrated some minds. The Australian government is now also undertaking investigations into 59 major international companies.

The key here seems to be that Australia has invested in structures and people to make it happen. Australian Treasurer Scott Morrison said the government had given the Australian Taxation Office “the power, the resources and the penalties to get the job done”. That has translated into the establishment of a 1k people strong team to investigate tax dodging by large firms and rich individual.

With a net gain of billions of Aussie dollars, expenditure on a 1000 strong team represents a real return on investment and it would be good to see similar measures taking place with HMRC in the UK.