MP slams 'invisible' Apple for avoiding Australian tax

MP slams 'invisible' Apple for avoiding Australian tax

Summary: Australian Labor MP Ed Husic has questioned how Apple can have such high expenses cutting profits in Australia when none of its manufacturing occurs locally.

SHARE:

Labor MP Ed Husic has applied the blowtorch to Apple after the company reported a drop in profits in Australia and New Zealand for the last financial year, yet increased its revenues to AU$6 billion.

Last month it was revealed that Apple raked in AU$5.9 billion in revenues in Australia and New Zealand, but after increases in expenses, the company reported a drop in net profit to AU$58.4 million, meaning the company only paid AU$40 million in taxes in Australia in 2012, compared to AU$94.7 million in 2011.

In parliament today, Husic, who has long targeted tech giants such as Apple over IT pricing in Australia, questioned how Apple could have AU$5.5 billion in costs.

"How? They don't manufacture here, there are no factories here. I don't know what their R&D effort is here," he said. "They've got a growing number of retail outlets, which I'm happy about — they're creating jobs locally — but surely those outlets don't cost AU$5.5 billion to maintain?"

He said that while Apple did have a head office in Australia, the company was keen to avoid engaging with government in Australia.

"They maintain a cloak of invisibility, and their key management team dodge any scrutiny, and even refuse to engage on any public policy issues," he said.

He suggested that the costs would have come from transfer pricing arrangements between Apple Australia and the US parent company, but he said that Apple "steadfastly refuses to engage" with government about this.

The practice of sending profits offshore to a country with a lower tax rate on profits is one frequently used by many multinational corporations, and the Australian government has recently been focusing on how it can keep Australian profits in Australia. The government has cited Google as one of the major companies using this practice to avoid tax on profits in Australia.

Husic said that Google was more approachable than Apple.

"Google at least engages with government, is prepared to talk, is prepared to be a lot more open about issues," he said.

"Apple on the other hand, believes they're above scrutiny, and that is completely unacceptable."

Husic has long been a fan of Apple products, but said that his view of the company has "well and truly dimmed" following several attempts to get Apple to front the IT pricing inquiry.

"There have been well-known price disparities between the US and Australian markets Apple operates in," he said. "They're not the only culprit, but they are by far and away the most defiant, and Australian consumers have borne the brunt of price discrimination by them, and now Australian taxpayers are shouldering the burden too."

Topics: Government, Apple, Government AU

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

8 comments
Log in or register to join the discussion
  • Another bit of tailor-made anti-Apple propaganda from Microsoft ZDNet

    I'd love to know how much Microsoft money found its way into Australian Labor MP Ed Husic coffers. Another bit of tailor-made anti-Apple propaganda from Microsoft ZDNet.
    zato_3@...
    • Want an answer?

      Simple, Apple Australia imports the stuff from Apple US & makes margins which are quite similar to Walmart or other companies involved in trading. Probably out of the 6 bill, 5.5 bill goes directly to pay for the idevices & the rest for managing their internal costs. If you want Apple to pay more taxes, convince them to manufacture in Australia.

      @zato, stop being a McCarthy trying to find communists everywhere. What does MS have to do with Apple being called by an Australian MP?
      mm71
    • Errr?

      Funny how fanbois like you right away blame anything negative about Apple and their precious gadgets on Microsoft [or Google or ....].
      Can you explain how Apple accumulated AU$5.5 billion in costs? This is Apple who reported that figure. Not ZDnet or Microsoft or Google ....
      Face it. You are biased.
      You're lucky you aren't in Australia. Mr. Husic would probably take you to court for your comments.
      Gisabun
  • Australian government diagnosed with Low T!

    Apple is a big target because they are the biggest tech company by market cap. They are the most profitable tech company right now, and they are legal tax frauds. They are not doing anything illegal, but that's not the same as being honest. And, it's not just Apple, it's the way global business works. Apple is simply an easy anecdotal example of a huge problem. Australia, and the rest of the world, need to address this issue. A legislative solution is the answer, not calling Apple up and asking for donations. Companies exist to make money, expecting them to do anything else besides make as much money as they can is ignorant and dumb. I wonder how the phone call would go " Oh please Apple, give us some money, we are the poor helpless government of Australia that survives on generosity." I wonder if the Australian police work that way? "Oh please pay your speeding ticket, pretty please?" Ed Huser, or Hoser, here's your sign! Grow a pair and go fix the real problem, your mamby pamby corporate coddling tax code! Apple has plenty of lawyers, it's called an AUDIT, Samsung would appreciate the break. Look it up, its just in front of Australia, should be easy to find. Maybe MP stands for Mighty Pointless? Yes, Apple is mocking you and your impotency Ed.

    PS. I love my Apple devices, Apple will do just fine paying taxes, as long as ALL corporations are treated equally, with clear and reasonable expectations.
    shiitaki
  • And the fanbois leap to the protection of Apple...

    Predictable lines as usual. A smear suggesting the MP is on the take from Microsoft (yawn). A run-on load of drivel from Shitaki suggesting the tax laws are at fault. I *think* that's what he was saying, it rambled so much it was hard to tell.
    meski.oz@...
  • Secretive

    if Apple have nothing to hide, why are they so hesitant to engage with the Australian government? This goes for ANY global company, but Apple is under scrutiny because they are being secretive. THAT'S what the article was about Apple fanbois, We are all aware companies maximise profits. All they have to do is make the cost of getting the item to Australia really high (setting a high cost from the factory), so that the maximum profit is obtained overseas and not here.

    Easy enough to do. Example - my factory (I own) in a country with less tax to pay makes me widgets. Widgets cost $1 to make. I charge my distribution arm IN that country $2 for the widget. Profit stays over there with the lower tax breaks. My distribution arm in Australia get's charged $5 for the same item, and makes far less margin selling it here. I still make my money up the chain, but pay far less tax because I make less profit here. Nothing new been going on for years.

    Whether we are happy with paying the (sometimes far) higher prices in Australia, AND the money going back to other countries INSTEAD of being used here to fund things for Australians is much harder to swallow. WE spend money on their products, yet the profit is distributed in such a way that more money leaves the country than is necessary.

    Only one way to stop that is to vote with your wallets. Up to you. No, I'm not saying don't buy Apple exactly, but any company that we are aware of that jacks prices for us Australians, or funnels it out of the country more than necessary, needs to know we won't stand for it. Don't buy their products. Simple. If you must, then buy it, fine, but no more complaining about it.
    Ramrunner-5dd3e
  • This is not uncommon

    As cited in the story, Apple is not the only culprit. Australians have been over-charged and under-serviced in the Technology arena for decades.

    In a post-industrial world, it doesn't matter whether you're buying a toaster on a motor vehicle----most of the profit is leaving the country.
    Treknology
  • The sad state of Australian politics

    "Labor MP Ed Husic has applied the blowtorch to Apple after the company reported a drop in profits in Australia and New Zealand for the last financial year, yet increased its revenues to AU$6 billion."

    You'd think that the Australian Labour party would be able to find MPs bright enough to know that companies pay corporation tax on profit, not revenue. These guys are going to make the law and they've no idea how it works already?
    Henry 3 Dogg