Why big tech will hate the Australian tax office’s latest ruling

Jens Büttner/Picture Alliance via Getty Images Countries like Australia have long struggled to tax the global tech giants.

Now, a new approach could significantly increase tax collected from multinationals such as Apple, Google, Microsoft and Amazon.

These companies earn significant revenue from Australian consumers.

However, much of the profit is ultimately recognised overseas.

Traditional tax rules have not kept pace with the way global businesses operate.

Over the last decade, Australia has introduced several laws targeting multinational tax avoidance and profit shifting.

These laws focus on where profits are made, where they are shifted to, and where they are ultimately taxed.

They are designed to prevent multinationals from shifting profits earned through sales to Australian consumers to an offshore location.

These measures have made it harder for multinationals to reduce their tax in Australia.

But they don’t deal with all the ways profits are shifted offshore.

A new ruling by the Australian Taxation Office (ATO) takes a different approach.

Rather than focusing on the flow of profits offshore, it focuses on the character of cross-border payments for software made to overseas entities in the same corporate group.

The ruling says some of these payments can be treated as royalties – and therefore taxed in Australia.

The scale of the problem The scale of the Australian operations of US tech giants can be seen in the ATO’s latest corporate tax transparency data .