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The amount, which is categorised as an expense towards “purchase of advertising space”, could further increase the company’s tax liability in the country, even as a dispute with Indian authorities — over the tax outlay on earlier transfers — continues to be heard in court.
Google<\/a> India has remitted a total of Rs 16,119.6 crore ($2.18 billion) towards “purchase of advertising space”, which is the biggest cost item in its P&L statement under “Miscellaneous expenses” for the period 2013-14 to 2017-18, as per regulatory filings made with the Registrar of Companies.
The transfers amount to 50-60% of the company’s total revenue in India over the five-year period.
Tax authorities<\/a> in India have contended that such transfers are not cost or transfer of profit, but ‘royalty’, which is subject to tax.
In October 2017, the Income-Tax Appellate Tribunal (ITAT<\/a>) in Bengaluru ruled in favour of the taxmen. The verdict was reiterated in May this year by ITAT<\/a>.
ITAT’s October 2017 ruling for the assessment years 2007-08 to 2012-13 directed Google<\/a> India to pay tax on Rs 1,457 crore — the total amount that it had remitted to Google Ireland during that period.
Google India<\/a> appealed against the ruling in the Karnataka High Court, following which it won an interim stay. The next hearing is scheduled for later this month.
Google India Liable to Pay Tax’<\/strong>
A tax official told ET on condition of anonymity, “Google India will be liable to pay tax on the transfers until 2016, when an indirect tax<\/a> in the form of equalisation levy was introduced. (Therefore) from FY17, when the equalisation levy (was introduced), they don’t have to pay withholding tax on royalty.”
The equalisation levy is a 6% upfront tax that advertisers have to pay to digital service providers, and is also known as ‘Google tax’.
This would mean that in addition to the tax on Rs 1,457 crore — the amount transferred between 2007-08 and 2012-13 — Google may have to also pay tax on the Rs 7,546 crore transferred for “purchase of advertising space” between 2013-14 and 2015-16, an analysis of its financial statements reveals.
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However, for the period after FY17, when the equalisation levy was introduced, there may be no further tax charged on “royalty”, said tax officials.
“Equalisation levy is an indirect tax<\/a> and is part of the Finance Bill. If they (Google) have taken the benefit of equalisation levy, then they don’t have to pay any other withholding tax under law,” said the official cited above.
Even during the ITAT hearing in Bengaluru earlier this year, Google India had contested the tax levied saying that it is already being charged due to the equalisation levy.
But the tax department had argued that the “equalisation levy does not determine the classification of payment between royalty and business income. Equalisation levy is only a charge on the payment made towards digital advertisement space by the advertisers”.
In an email reply to ET’s queries, a representative for Google said, “We comply with all tax laws in India and pay all applicable taxes. The ITAT order was a clear departure from previous judgements on the issues and not in line with India’s double taxation avoidance agreement. We continue to represent the facts of the case at the high court as the ITAT ruling is based on an inaccurate representation of our business operations in India.”
‘ ADWORDS’ PROGRAMME <\/strong>
The key element of the relationship between Google India and Google Ireland is the ‘AdWords’ programme — a product through which an advertiser is able to publish advertisements on the Google website.
“Under this AdWords Agreement and the Service Agreement, the assessee (Google India) was given licence to use confidential information, technical knowhow, trademark, brand features, derivative works, etc,” the tax department said during the proceedings at ITAT in Bengaluru.
Payments made to Google Ireland are “not the payment simpliciter towards the purchase of AdWords space which may be treated as business profit in the hands of the recipient but it is a payment of royalty”, the tax department said at the hearing.
Google India contests this stand by tax authorities<\/a> and claims there is no transfer of technical knowhow, trademark or intellectual property rights.
According to the search giant, Google India is the “non-exclusive authorised distributor of AdWords programme to the advertisers in India” and sees its role as “advertisement agency”, facilitating a transaction between a brand and a newspaper.
WHAT EXPERTS SAY<\/strong>
Experts are of the view that India should learn from the UK and tax a proportion of all the revenue earned in the country by multinational technology companies.
“It should not allow Google or any other company to get away with this,” said Harvard Law School distinguished fellow Vivek Wadhwa.
“These tech companies are the richest in the world, take advantage of infrastructure and platforms created by governments all over the world, and do little by way of CSR (corporate social responsibility). And then they do everything they can to avoid paying taxes,” he said.
In FY18, Google India reported a 30% increase in revenues at Rs 9,337.7 crore with profit after tax rising 33% to Rs 407.2 crore. The amount transferred for “purchase of advertising space” rose 36% to Rs 4,949.6 crore.
Other major expenses for Google India include salary and wages, which increased by 91% in the five-year period to Rs 658 crore, while advertising and promotion spends rose fivefold to Rs 696 crore.
During the same five-year period, Google India’s profit margin remained steady at 4-5%. On the other hand, Google’s parent Alphabet had an average quarterly profit margin of 19.85% for the past five years, with a maximum and minimum range of 30.18% and negative 9.34% during the period, respectively, according to data from investment research platform YCharts.
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量,这是归类为一个费用对“购买广告空间”,可以进一步提高公司的纳税义务,即使与印度当局发生争执——早在税收支出转移仍然是在法庭上听到。
谷歌印度已汇出共有16119。6卢比(21.8亿美元)对“购买广告空间”,这是其最大的成本项目损益表在“杂项费用2013 - 14 - 2017 - 18,按提交给监管机构的文件由公司的注册。
转账金额50 - 60%的公司在印度的总收入超过五年。
税务机关在印度声称这种转移不是成本或利润的转移,但“皇室”税。
2017年10月,所得税上诉法庭(开办)在班加罗尔裁定税务官员的支持。判决结果是重申了今年5月开办。
开办的2017年10月评估年执政2007 - 08至2012 - 13执导谷歌印度缴税1457卢比,总量已汇出谷歌爱尔兰在那段时期。
谷歌印度上诉卡纳塔克邦最高法院的裁决,它赢得了一个临时停留。下一个听证会定于本月晚些时候。
谷歌印度应纳税的
名不愿透露姓名的官员告诉ET征税,”谷歌印度将纳税责任转移,直到2016年,当一个间接税介绍了平衡的形式征收。(因此)FY17,当平衡税(了),他们不需要缴纳预扣税皇室。”
平衡税是一个广告商必须支付6%的预付税数字服务提供商,也被称为“谷歌税”。
这意味着除了税1457卢比——转移2007 - 08至2012 - 13 -谷歌也可能需要缴税7546卢比之间的“购买广告空间”转移到2013 - 14 - 2015 - 16,分析其财务报表显示。
然而,对于周期FY17之后,介绍了平衡税时,可能没有进一步对“皇室”收取税收,税务官员说。
“平衡征税是一个间接税财政法案的一部分。如果他们(Google)平衡税的好处,然后他们不需要支付任何其他预提税法律,”上面引用的官员说。
即使在开办听证会在班加罗尔今年早些时候,谷歌印度有争议的税收征收说它已经被指控由于平衡税。
但是税务部门认为,“平衡税不确定支付版税和业务收入之间的分类。平衡征收只是收取付款向数字广告空间的广告”。
在电子邮件回复等的查询,谷歌公司的一位代表说,“我们遵守税法在印度和支付所有适用的税。开办秩序明显背离之前判断问题和不符合印度的避免双重征税协议。我们继续代表事实的情况下在高等法院开办的判决是基于一个不准确的表示我们的业务操作在印度。”
“ADWORDS”项目
关键元素谷歌谷歌印度和爱尔兰之间的关系是“AdWords”计划——产品通过广告客户能够在谷歌网站上发布广告。
”在这种AdWords的协议和服务协议,assessee(谷歌印度)被授权使用机密信息,技术诀窍、商标、品牌特征,派生作品,等等,“税务部门说在班加罗尔的ITAT在诉讼。
付款谷歌爱尔兰“不付款无限地向购买AdWords空间可能被视为业务利润的收件人但支付版税,税务部门在听证会上说。
谷歌印度这个站在竞赛税务机关和索赔没有转让技术诀窍、商标或知识产权。
根据搜索巨头谷歌印度是“非排他性授权经销商的AdWords广告客户在印度项目”,看到“广告机构”地位,促进品牌之间的交易和一份报纸。乐动扑克
专家说什么
专家认为,印度应该借鉴英国和税收收入的比例由跨国科技公司在中国。
“应该不允许谷歌或其他任何公司离开,”哈佛大学法学院特聘研究员Vivek Wadhwa说。
“这些科技公司是世界上最富有的,利用基础设施和平台由世界各地的政府,并没有通过CSR(企业社会责任)。然后他们尽他们所能来避免交税,”他说。
在FY18,谷歌印度增加了30%达到9337卢比的收入和税后利润上升33%,至407.2卢比。“购买广告空间”的传输量增长36%,至4949 .6卢比。
谷歌印度其他主要费用包括工资和工资,在五年内增加了91%到658卢比,而广告和促销支出上涨了5倍,至696卢比。
同样的5年期间,谷歌印度的利润率仍稳定在4 - 5%。另一方面,谷歌的母公司字母表平均季度利润率19.85%在过去的五年中,最大和最小范围的30.18%,期间负9.34%,分别YCharts根据投资研究的数据平台。
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