During early November, executives from Google, Amazon and Starbucks were alleged of being dishonest and manipulative in their tax payments
Australia has drafted a revised tax law to target big multinational firms, including Google Australia, from transferring their revenue to countries which have lower tax rates.
Australia's firm tax rate is 30% when compared to 12.5% tax rate in Ireland.
The move is along the lines of a worldwide push demanding G20 group of nations to mandate firms pay their complete tax on profits made in the country, following claims of large firms making use of loopholes to transfer their revenue away from the region where they are generated.
Australia assistant treasurer David Bradbury said that Google is using a web of offshore holding firms in Ireland and the Netherlands to reduce its tax payments in Australia, in a so-called 'Double Irish Dutch sandwich' and pay less than 12.5% on the overall transaction.
"While the day-to-day dealings of Australian firms advertising on Google might be with Google Australia, under the fine print of contracts Australian firms sign with Google, they are actually purchasing their advertising from an Irish subsidiary of Google," Bradbury said.
During early November, executives from Google, Amazon and Starbucks were alleged of being dishonest and manipulative in their tax payments during a UK parliamentary investigation into the low amount of tax that some firms pay.
Google Australia spokesman said that the firm is abided by all tax laws implemented by the Australian government.
"We make a significant contribution to Australia's economy by helping thousands of businesses grow online, providing services to millions of Australians at no cost, as well as employing 650 people locally," spokesman said.