ATO Investigates Tech Giants Over Data Centre Taxes

The Australian Taxation Office (ATO) is reviewing how global technology companies report profits from local data centres in an effort to address potential tax avoidance. This audit may change how billions in digital revenue are taxed.

As tech companies make major investments in Australia’s data infrastructure, there is growing concern that locally generated profits are being recorded overseas to reduce tax obligations. The ATO is examining whether data centres in Australia, often labeled as low-margin service operations, are actually more central to revenue generation as they support core functions like cloud computing and artificial intelligence.

Currently, companies such as Amazon, Google and Microsoft are investing heavily in local infrastructure. Amazon alone has committed $20 billion to data centre development. These companies are building their own facilities or leasing space from providers such as NextDC and AirTrunk. These data hubs support everything from training AI models to storing cloud data for both Australian and international customers. While the companies argue the centres provide backend support for overseas business units, the ATO believes local operations may be generating more economic value than is being reported.

The key issue is where the revenue is being taxed. The ATO suggests that in a typical $100 sale generated through an Australian data centre, only around $5 may be taxed locally if the majority of income is reported in low-tax jurisdictions like Singapore. Transparency reports back this concern. In one year, Google Cloud reported $158 million in Australian revenue but paid under $9 million in tax. Amazon Web Services earned $2.8 billion and paid $51 million in tax. These figures suggest possible profit shifting.

This investigation could shape how digital infrastructure profits are taxed globally. A wider concern is the potential for an "innovation chill" where unclear tax policies discourage long-term investment in Australian tech industries. With local data centre capacity projected to double by 2030 and $26 billion in investment needed, the future of digital growth in Australia is at a turning point.

Source: Australian Financial Review

Doga Sydney - Corporate Cuddles & Puppy Yoga

Take what you’re doing offline and circle back on team wellness because real team bonding happens with puppies, not PowerPoint. Give your team an event they’ll actually look forward to with Puppy Yoga!

We’ve got you covered with Corporate Cuddles and Puppy Yoga 🐶