Government To Go After E-Commerce Companies

The federal government is going after giant e-commerce companies to ensure that it gets more tax than what these companies are paying for.

Companies like Google and Apple appear to be circumventing current taxation policies to avoid paying huge taxes to country governments.

Assistant Treasurer David Bradbury said transfer pricing policies will be beefed up and reviewed for loopholes. Bradbury said e-commerce companies use the “Double Irish Dutch Sandwich” to avoid paying taxes.

The move is part of federal government’s effort to produce a budget surplus and avoid a deficit.

Australia is joining many other countries in pushing e-commerce companies to pay a fair amount of taxes from the transactions made in the respective countries. Some of these e-commerce companies include Google, Amazon and Apple.

Treasury is now developing a scoping paper while a discussion paper is being prepared to identify risks for the country’s corporate tax base sustainability and look for possible solutions. Revenue group Rob Heferen will lead the scoping paper.

Bradbury said governments should adapt to the changing times, especially in the age of digital. Online invoicing makes it difficult to determine where services should be taxed. He added that governments lack effectiveness on international tax concepts that affect the digital world.

In the United Kingdom, Amazon amassed more than 3 billion pounds in sales. It routed its transactions to Luxembourg, which meant Amazon only had to pay an measly tax rate of 2.5 percent.