Australia crackdown on Google taxes seen holding investment risks
30 percent tax on mining profits that was watered down by the government after fierce opposition from the mining industry. Similar concerns about Australia's reputation surrounded the Australian Taxation Office's chase of tax dollars from offshore private equity firms, which was sparked by U.S.-based TPG Capital Management LP's profit on the $2.4 billion public sale of retailer Myer Holdings.
Although private equity investment in Australia has slowed with the economy, it has not stalled as critics had warned.
Total investment in Australia's $30.5 billion buyout industry fell 24 percent in the year to June, according to industry lobby group the Australian Private Equity and Venture Capital Association.
"While some investors will not be happy with tax changes in Australia, what may appeal to them is the economic climate of the country," said Niv Tadmore, partner at Clayton Utz. While the economy is expected to slow as Chinese demand for resources eases, it remains resilient after weathering the financial crisis better than any other major developed country.
DOUBLE IRISH DUTCH SANDWICH
In a highly unusual speech on Nov. 22, Australia's Assistant Treasurer David Bradbury took aim at Google Inc, describing in detail the strategies it has reportedly used to minimise corporate tax payment.
"It is not my usual practice to mention companies by name," he said.
Google's tax structures, he said, included a so-called "Double Irish Dutch Sandwich", in which income was routed to Ireland, a royalty paid from the Irish unit to a Dutch subsidiary, and then repaid to a second Irish holding company controlled in Bermuda,
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