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Google tax is a popular term used to refer to anti-tax avoidance provisions that have been passed in several jurisdictions dealing with profits or royalties that have been diverted to other jurisdictions with lower or nil rates.
The UK tax is set at 6 percentage points above the headline corporation tax rate, or 31% of taxable diverted profits for a company with annual profits over £250,000 (55% with respect to Ringfencing), and was in 2014 forecast by HM Treasury to Raise £350m annually by 2017–18.
The Confederation of British Industry (CBI) described the effort to impose taxation on diverted profits as "a real concern for global business". Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants (ACCA), said, "It's a bit like reporting yourself to the police and then having to defend yourself."
Amazon announced in May 2015 that it will start paying tax in the UK on British retail sales rather than booking sales through Luxembourg, this will mean the group will not have to pay the diverted profit tax.
The Australian measures focus on arrangements that attempt to avoid establishing a permanent establishment presence in Australia. While they were originally intended to target a group of thirty large multinational corporations, other taxpayers will still need to document whether they would be subject to the provisions, as the Australian Taxation Office would have the power to assess an administrative penalty of 100% of any calculated shortfall of tax owed, together with base tax and interest.
In the 2016 Australian federal budget, the government announced the introduction of a diverted profits tax (DPT) from 1 July 2017. The Diverted Profits Tax Act 2017 imposes a 40 percent tax on avoidance schemes entered into by significant global entities (SGEs), which are defined as global parent entities with an annual global income of A$1 billion or more.
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