what is a google tax 
a google tax also known as a diverted profits tax refers to anti tax avoidance provisions that have been introduced in some countries several jurisdictions implemented the provision to stop companies from diverting profits or royalties to other jurisdictions that have lower or even zero tax rates for example internet giant alphabet inc s googl google paid a negligible amount in taxes in the united kingdom by completing its transactions in the low tax city of dublin ireland even though it earned 6 5 billion in revenue in the u k understanding the google taxthough the term includes the name of the company google that became the poster boy for the practice diverting profits is rampant across various industry sectors technology giants from the u s like meta formerly facebook meta apple inc aapl and amazon inc amzn as well as other multinational corporations like starbucks inc sbux and diageo plc deo have all used such practices to lower their tax bills for instance a mobile app like meta s whatsapp messenger or a game like clash of clans may not have a single employee in a particular country but it can still derive a lot of profit from its local user base through online ads and in app purchases companies enjoyed the freedom to account for such revenues and earnings at a destination of their choice and they often diverted it to low cost jurisdictions as a result the u s securities and exchange commission sec mandates that american businesses publicly report details on where and how much revenue they generate across the globe allowing the authorities of other countries such as the united kingdom and australia to obtain more concrete data on any possible tax avoidance measures those businesses may be using in the u k and australia tax laws were modified to prevent companies from following such practices amid rising public anger the u k introduced a diverted profits tax in 2015 which it set at 25 1 her majesty s revenue and customs hmrc the u k s tax collection agency secured 6 5 billion around 8 33 billion in additional taxes by challenging the transfer pricing arrangements of multinationals between 2012 2018 its own figures show that it took in an extra 853 million around 1 09 billion in 2015 16 1 62 billion around 2 08 billion in 2016 17 and 1 68 billion around 2 15 billion in 2017 18 2australia began implementing measures in 2015 that led to the introduction of its own diverted profits tax from july 2017 onward it imposed a 40 tax on such tax avoidance practices 3responding to these developments global enterprises are now voluntarily paying up past dues and entering into settlements with the tax authorities to avoid being shamed by a google tax diageo the london based beverage giant behind johnnie walker scotch tanqueray gin and other major brands struck an agreement with the hmrc to pay an extra 190 million around 244 million in corporation tax to avoid the potential damage to its brand reputation emerging from the google tax 4 google also agreed in 2016 to pay about 185 million in back taxes to the u k 5facing similar charges in france google paid french authorities nearly 1 billion euros about 1 1 billion in fines and additional taxes in 2019 the company said at the time we remain convinced that a coordinated reform of the international tax system is the best way to provide a clear framework for companies operating worldwide 6