The managing director of Google Australia says the reason the tech giant pays so little tax in Australia is because the majority of risk and investment undertaken by the company is in the US.
Maile Carnegie has told a Senate enquiry into tax avoidance that Google Australia and New Zealand in 2013 made $58 million in revenue and profits of just over $46 million. The company paid just $7.1 million in taxes.
But Ms Carnegie said the majority of the company's taxes were paid in the US because that was where the global headquarters was based, and where the company generated the most investment in research and development, and also where it undertook the most risk.
"And that in turn is what drives our profits," Ms Carnegie said.
"It's very easy to underestimate the risks and also the costs that are required ... to develop that intellectual capital."
Ms Carnegie said the next type of innovation, like a driverless car, is made possible by that research and development.
"The explanation for why an Australian multi-national, whether they be in mining or in biotech, is able to generate the majority of their revenue outside of Australia but pay the majority of their taxes inside of Australia is that the Australian-based headquarters does most of the investment and carries most of the risk," she told the hearing in Sydney.
"That explanation is also why Google pays most of its taxes in our US headquarters, because the US headquarters is where the majority of our costs are borne."
Ms Carnegie was grilled on Wednesday, along with executives from Apple and Microsoft.
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