Google has been hit with a €192m tax fine in India over its AdWords policy, and now Irish multinationals are fearing repercussions.
Despite claims by Google’s Indian operation that it acted above board in sending AdWords revenue generated in the country to Ireland, the Indian government has ruled against the tech giant, claiming it now owes the state €192m in back taxes.
In its decision, the tribunal wrote: “It is clear and conspicuous that Google India and Google Ireland wanted to avoid payment of taxes in India.
“This is a clear design to skip the liabilities by both [Google India] as well as Google Ireland.”
Now, according to The Irish Times, this has Google and many other major tech firms with operations here and in India worried they could also be hit with legal action.
Following the decision, teams of lawyers are now making their way to India, working on behalf of companies such as Amazon, Microsoft and Apple, to warn the Indian finance ministry of possible implications over the decision.
This will comes as little to surprise to some, with Riaz Thingna, a partner with Grant Thornton in India, saying that this decision will have a “far-reaching impact on business arrangements”.
The investigation into Google India and Google Ireland’s relationship began in 2011 when the tax authority raised the issue, with the former demanding to know why AdWords revenue was being directed to Ireland.
Google India’s argument was that it only handled the marketing and distribution of AdWords products to customers, but all of the financial work was done from Ireland, which has a more favourable tax rate.
While Google Ireland has remained silent on the matter, Google India has announced it will appeal the court decision, claiming it breaks a double-taxation agreement between the two countries.
Updated, 3.35pm, 13 November 2017: The main image of this article has been changed as the previous one showed an inverted flag of India.