What is 'Google Tax' or Diverted Profits Tax and the Singapore case?

Diverted Profits Tax, commonly known as "Google tax", refers to tax provisions designed to counter the practice of profits being diverted to other jurisdictions that have lower or zero tax rates

The Income Tax Appellate Tribunal (ITAT) has dismissed the I-T department’s appeal seeking disallowance from Google Singapore’s advertising system, AdWords, for not charging an equalisation levy, commonly known as Google tax, citing jurisdictional grounds.

What is Google Tax?

The Diverted Profits Tax, commonly known as “Google tax”, refers to tax provisions designed to counter the practice of profits or royalties being diverted to other jurisdictions that have lower or zero tax rates.

While Google is one of the most frequent practitioners of such diversions — and hence the tax’s informal nickname — the practice is quite prevalent across industry sectors.