The shift to Asia-Pacific may make it easier for the firm to handle tax disputes
Google has quietly started having its Asia-Pacific subsidiary provide advertising services to its customers in several South Asian countries—moving away from its initial practice of billing them on behalf of Google Ireland. This move, industry insiders say, could be prompted by the number of tax disputes that the search giant is facing.
In India, for instance, income tax authorities have slapped a penalty on Google for crediting nearly Rs. 120 crore to Google Ireland without deducting tax at source in line with the tax treaty between India and Ireland.
With this move, for only certain countries, Google Asia Pacific Pte. Ltd will assume all of the rights, duties and obligations covered by the advertisers’ current agreement with Google Ireland Ltd., according to a company notice.
Countries like Australia made the switch over a year ago, while other South East Asian countries started the process of transitioning at the start of this year, according to multiple sources.
While India does not appear to be on the official list of those countries that are ‘in the process of being transitioned from Google Ireland to Google Asia Pacific’, several Indian advertisers have reportedly started receiving mails from Google AdWords informing them of the changes. “Several people have started receiving e-mails that say that Google Ireland will no longer be handing, or be the recipient of funds for AdWords purchases online. While the implications are not immediately clear, it could be that this move may make it easier to handle any possible tax disputes,” said a person with direct knowledge of the mater.
A Google spokesperson did not immediately respond to requests for a comment.