Australian companies using videoconferencing may have to pay double tax, but UK and US firms don’t have the same problem. An article in the Australian Financial Review last month said the infiltration of the information superhighway into boardrooms could lead to double taxation because it can easily change a company’s place of residence – critical in determining tax liabilities. For example, an Australian company with a Hong Kong subsidiary would see its subsidiary’s profits taxed in Hong Kong. But if board meetings were held via a video conference, and there was a majority of Australians present at the meeting, the Australian Tax Office could claim that management control rested in Australia. Technically the Hong Kong arm should pay Australian tax. However, the UK Inland Revenue said the location of a board meeting does not affect taxation. Tax liability depends on where the firm is incorporated and where deeds are held, which determines whether it is a UK company. The US Internal Revenue Service said the same.
