​Tech giants appear compliant with Australia's anti-avoidance tax law

First corporate tax transparency report reflecting Australia's Multinational Anti-Avoidance Law shows tech giants coughing up to the ATO.
Written by Asha Barbaschow, Contributor

Large, profitable global technology firms operating in Australia appear to be abiding by local tax laws, with a report from the Australian Taxation Office (ATO) showing that Apple, AWS, Facebook, Google, Microsoft, and Samsung all paid a decent amount of tax during the 2016-17 financial year.

The 2016-17 Report of Entity Tax Information lists over 2,100 Australian public and foreign-owned corporate tax entities with a total income of AU$100 million or more, as well as Australian-owned resident private companies with a total income of AU$200 million or more.

It shows the revenue the companies made and how much they paid in tax.

With revenue tipping AU$8 billion during 2016-17, Apple handed over AU$81 million in tax to the ATO; Amazon Web Services Australia made AU$125 million in the region and paid AU$3.5 million in tax; Facebook Australia paid AU$12.5 million in tax on income of AU$331 million; making just shy of AU$1.5 billion, Google Australia paid AU$33 million in tax; Microsoft paid AU$53.5 million in tax, on income of AU$1 billion; and Samsung Electronics Australia made AU$2.4 billion during the reported period, giving the ATO just under AU$20 million in tax.

Other multinational tech firms operating in Australia -- IBM, SAP Australia, Hewlett Packard South Pacific, Dimension Data Australia, DXC Technology Australia, and NEC Australia -- did not pay a cent in tax to the ATO during the 2016-17 financial year, however.

ATO Second Commissioner Jeremy Hirschhorn warned against focusing on the number of entities that paid no tax, as corporate income tax is payable on profits, not gross income, and the ATO's report does not disclose profits.

For example, the local arm of Dimension Data ended the 2017 financial year with a loss of AU$16.47 million; and despite making over AU$1 billion in revenue, SAP Australia reported a total loss of AU$140 million for the year ended December 31, 2017. As a result, neither firms have a taxable income.

IBM Australia, which this year was handed a billion-dollar contract by the federal government, made AU$3.3 billion in Australia during 2016-17, yet was not required to pay any tax.

Sydney startup darling Atlassian did not pay any tax during the year, either, despite generating revenue of AU$774 million.

The 2016-17 tax transparency report is the first to display the impacts of Australia's Multinational Anti-Avoidance Law (MAAL).

Under the MAAL, companies operating with an annual global income of more than AU$1 billion in Australia are required to lodge their general purpose financial statements to the ATO if they are not already doing so with the Australian Securities and Investments Commission.

Essentially, multinational companies found to be avoiding tax have pay back the tax owed, plus a 100 percent penalty.

"In coming years the full effect of the MAAL will flow through as multinational companies book billions more in sales locally," Hirschhorn said, noting companies had restructured to comply with the requirements of the law and that is now being reflected in the ATO report.

The Australian government legislated a new Diverted Profits Tax (DPT) in March 2017, which is intended to prevent the practice of multinational organisations shifting profits made in Australia offshore to avoid paying tax.

The DPT hits multinationals with global revenue of more than AU$1 billion and Australian revenue of greater than AU$25 million with a 40 percent tax on all profits.

The tax is expected to see AU$100 million in revenue per year -- from 2018-19 -- stay on Australian soil.

The new legislation mirrors laws implemented in the United Kingdom, nicknamed the Google Tax after the search engine giant was ordered to pay the UK government £130 million in back taxes.


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