Google Australia’s tax bill is just $85 million despite rising profits

Search giant Google paid $85 million in taxes in 2021 despite earning more than $7 billion from the local economy, shifting most of the profits to an international subsidiary that reduced the size of its profits.

Financial accounts filed Thursday with the corporate regulator for calendar and fiscal 2021 show Google’s gross revenue in Australia grew 38 percent to $7.2 billion in 2021, a major increase and a new high. Advertising revenue reached $6.1 billion, up from $4.4 billion a year earlier.

Google's local arm, led by CEO Mel Silva, grew revenue by 38 percent last year.

Google’s local arm, led by CEO Mel Silva, grew revenue by 38 percent last year.Credit:louis kennerley

Google said its net income, which excludes certain costs of sales, was $1.7 billion, up from $1.4 billion a year earlier. As a result, Google made a pretax profit of $404 million in 2021 compared to $239 million in 2020. His company’s tax bill rose to $85 million from $76 million.

The search giant did not disclose how much it was paying under recently struck multi-year business deals with media companies including Nine Entertainment Co (owner of this heading), News Corp Australia, publisher of the australian, The daily telegraph Y the herald sun, and Seven West Media. These deals were completed through an international subsidiary.

A Google spokesman said the company had invested $1 billion in its local operations.

“Over the next five years, through our Digital Future Initiative, we plan to invest in infrastructure, partnerships and technology research, including a Google research center in Australia,” the spokesperson said.

Businesses pay taxes on profits, not income. However, tech companies have been criticized for funneling money generated in Australia through overseas subsidiaries to reduce their local profits and minimize their tax bills. Despite the fact that most of its money moves abroad, Google publicly supports the OECD’s efforts to reform the global tax system and is a voluntary signatory to Australia’s Tax Transparency Code.

Charging

Revenue growth soared in the same year that Google was busy striking business deals with local media outlets in response to legislation introduced by the Australian government. Google initially threatened to remove search from the Australian market to avoid laws that would have forced it to enter into business negotiations with media companies or risk fines of up to 10 percent of revenue.

He ended up cooperating with the government after discussions between Google CEO Sundar Pichai and former treasurer Josh Frydenberg gave the company a loophole.

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