​Google, Apple, Microsoft to face tax avoidance questions

Google, Apple, and Microsoft will face a parliamentary inquiry into corporate tax avoidance this week, as the Australian government moves to crack down on tax avoidance by multinational corporations operating in Australia.
Written by Leon Spencer, Contributor

Three of the largest internet companies operating in Australia are set to face questions about their taxation practices this week, as part of the federal government's move to crack down on profit shifting.

A parliamentary inquiry into corporate tax avoidance, instigated by the Greens and Labor parties, will hold public hearings across the country on Wednesday, Thursday, and Friday.

Apple, Google, and Microsoft representatives will face questions on Wednesday from the Senate Economics References Committee conducting the inquiry.

Greens party leader Christine Milne, who in October last year put forward the motion to launch the inquiry, suggested that there should be more transparency when it comes to the tax practices of large multinational corporations.

"I want to hear why it's not reasonable for us to be able to know all the subsidiaries [companies] have, where they are located, what their practices have been in terms of their profit shifting," Milne told ABC radio on Tuesday.

The Australian government has previously called out companies such as Google and Apple for profit shifting via the employment of the so-called "Double Irish Dutch Sandwich" method of funnelling money through countries outside of Australia to pay very low taxes domestically, despite significantly high revenue from the companies' sales in Australia.

Last year, it was revealed that Apple had 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, allowing the company to pay only AU$40 million in taxes -- compared to AU$94.7 million in 2011.

However, in its submission to the committee conducting the inquiry, Apple said that its Australian operation complies fully with its local tax obligations.

"All of Apple's operations in Australia (distribution of finished goods, retail, online, and iTunes) are conducted through APL [Apple Pty Ltd]," it said in its submission. "Australian-based Apple customers of these operations deal with APL directly, with such revenue reported by APL in the company's statutory accounts and tax paid thereon in Australia.

"As such, APL collects hundreds of millions of dollars of Australian GST on the sale of its products," it said.

Meanwhile, Google said in its submission to the inquiry that globally, it pays billions of dollars in corporate tax every year, and its corporate tax rate in 2014 was 19 percent. "A few percent lower than the OECD average of 25 percent," it said.

In Australia, Google said it invests AU$300 million each year, employing 500 engineers, some of whom are working on research and development projects.

"For the last six years, Google applied for and received a tax benefit from the tax office for projects being undertaken by our engineers," it said.

Microsoft said in its submission that it complies with the tax rules in Australia, and in each jurisdiction in which it operates and pays billions of dollars each year in total taxes, including US federal, state, local, and foreign taxes.

"The tax rules that we follow in the US generally provide for the deferral of US tax on the earnings of foreign subsidiaries until those earnings are repatriated in the form of dividends," it said in its submission. "Microsoft Australia's effective tax rate in Australia for each of fiscal years 2014, 2013, and 2012 was above Australia's statutory tax rate of 30 percent."

However, Milne said in a statement that Google and Apple, along with the likes of BHP, KPMG, and Glencore, are all significant players in the local market, and should "front up" about their tax practices.

"It's time to make sure that as a nation we've got the money we need for health, for education, and to look after our environment, rather than see these multinational corporations organise themselves to rip off Australia," said Milne.

With AAP

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