Tag Archives: Google

Difficult and contentious: taxing the digital economy (Australia)

Accountants have been urged to keep a lookout for significant changes to the tax environment as the government considers options for taxing the digital economy.

In Treasurer Scott Morrison’s budget address, he noted how the government’s crackdown on multinationals had brought $7 billion a year in sales revenue and would now be looking towards the digital economy as part of its initiatives to strengthen its tax base.

“The next big challenge is to ensure big multinational digital and tech companies pay their fair share of tax,” said Mr Morrison.

“Over the past year I have been working with counterparts at the G20 to bring the digital economy into the global tax net.

“In a few weeks’ time I will release a discussion paper that will explore options for taxing digital business in Australia.”

Thomson Reuters tax consultant Terry Hayes believes taxing digital business in Australia will continue to be a difficult and contentious issue and suggested that Mr Morrison was looking to Europe for ideas.

“Europe has been taking a lead in measures to tax the digital economy,” said Mr Hayes.

“In March this year, the European Commission proposed to introduce a digital services tax aimed at addressing the tax challenges of the digital economy in the European Union. Companies such as Google and Facebook would clearly be impacted.”

Mr Hayes believes the upcoming discussion paper announced by Mr Morrison might shadow two distinct legislative proposals put forward by the European Commission in March this year.

The proposed long-term solution would allow EU member states to tax profits that are generated in their territory, even if a company does not have a physical presence there. Profits would be registered and taxed where businesses have significant interaction with users through digital channels.

The second option, would be for an interim digital tax, roughly 3 per cent, to cover the main digital activities that currently escape tax altogether. This interim tax would apply to revenues created from activities where users play a major role in value creation.

“However, it is understood there may be some wavering on the proposals as concerns rise among European countries of possible US retaliation over the measures,” said Mr Hayes.

source: www.accountantsdaily.com.au

India:Google tax may be broadened to cover non-digital MNCs

India FlagMUMBAI: A budgetary proposal to tax multinationals with a substantial user base in India such as Google and Facebook is now being widened to include non-digital companies.
This could mean that any company that merely sells goods or services in India could see domestic taxes of up to 42% on their profits, said two people with direct knowledge of the matter.

The government is planning to introduce rules to effect the change proposed in the budget in the coming weeks, said one of the persons quoted above.
Many tax experts fear this could impact several multinational companies that only export goods or services to India.

“The question is whether there is a tax to do business with India. If non-digital companies that merely trade with India could see their business connection/permanent establishment set in India slapped with domestic taxes, this could lead to unsettling of settled tax positions,” said , partner, Ashok Maheshwary & Associates LLP.

According to another person with direct knowledge of the matter, the impact on non-digital companies is unintentional.

Source:https://economictimes.indiatimes.com