The Tax Office is caught up in a battle with the US government and tech giants like Microsoft over plans to tax billions of dollars worth of software transactions for the first time.
The Australian Taxation Office is in a standoff with the US trade agencies and tech giants over plans to tax billions of dollars worth of software transactions for the first time – a move that the US Treasury has warned could trigger a treaty dispute between the two countries.
The ATO’s proposed ruling has been described by US trade groups – like the US National Foreign Trade Council – as “gross overreach”. The US Council for International Business has called it “highly destabilising and contentious for cross-border business and transactions with Australia”.
“The ATO is concerned that some multinationals involved in software distribution have mischaracterised payments as a payment for a service , rather than as a payment for the use of intellectual property ,” a spokesperson said.
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