The standoff emerges as Australia tries to position itself as a preferred location for large-scale computing facilities, thanks to plentiful land, strong solar resources and political stability. The federal government is actively courting investment from major cloud and AI players and officials are said to be keen on securing Google’s regional hub, which would sit alongside existing and planned data centre projects already reshaping the country’s digital infrastructure.
Under current rules, Google worries that building a large, permanent data centre footprint could give the ATO grounds to treat the hub as a permanent establishment. This would expose a wider slice of its earnings to Australia’s 30% company tax rate, which is significantly higher than what it typically pays via offshore entities servicing Australian customers. The ATO has been auditing global tech and data centre businesses since 2024 over concerns about profit shifting and under-reported local revenue. It prefers to assess each project on its specific structure rather than issue broad public rulings, and instead steers companies toward private, binding rulings or advance pricing agreements for certainty.
This tax uncertainty sits against a backdrop of an estimated $150 billion national pipeline of data centre projects by 2030, which could more than triple installed capacity and make Australia a major AI and cloud hub if the investment actually lands. The government appears reluctant to rewrite tax law or create bespoke concessions for a single tech company, and is signalling that investors must work within existing settings, even as it fast-tracks approvals for projects that fund their own renewable power. That approach looks likely to protect the tax base and address long-running profit shifting concerns, but it also seems to increase the risk of disputes, potential double taxation for global firms and a more cautious pace of AI infrastructure investment while the rules are tested in practice.
