ATO Goes After Harvey Norman & JB Hi Fi Suppliers
Overseas tech and appliance Companies who sell goods via Harvey Norman and JB HI Fi have been targeted by the Australian Tax Office, high on the list is Microsoft, Google, as well as social media Companies Facebook and Twitter.
The man driving the push to get more revenue from tech and appliance Companies is Tax commissioner Chris Jordan who has said that he is currently initiating joint forensic tax audits with other countries’ authorities, in an escalation of his push to make sure that big global tech Companies pay their fair share of tax in Australia.
In extensive interviews with The Australian, Mr Jordan revealed his blitz on multinationals has already reaped a $5 billion windfall in unpaid taxes for the Australian Taxation Office in just 16 months. Apple is believed to be one of the Companies who have significantly increased the amount of taxes they pay in Australia.
He accused some multinationals of attempting to “bamboozle” him with financial “fairytales”, and “trying to intellectually browbeat us” with “literally half a metre-high reports” and “spaghetti diagrams” on whiteboards.
“They’d say: ‘Look, the world’s greatest experts say this works. Who are you as the tax office to challenge these experts?’” Mr Jordan said. “So, they were trying to get us boxed into a technical analysis in a corner.”
Singling out Google who is currently looking to expand sales of their hardware via JB Hi Fi and Harvey Norman he decried the methods Google had used to structure its business to pay low tax in Australia.
Google PR who are well known for their manipulative methods have not commented on the tax commissioner’s appraisal of the Companies methods.
At the heart of most of the ATO’s disputes with multinationals is where the companies earned their revenues and profits.
He said the internet giant had previously declared so little income that it had been considered a small business for tax purposes at the time.
“At one point, Google wasn’t even in our large (company) market segment, because it didn’t turn over more than $250m a year (in Australia),” he said. “Absurd. They used to be looked after by the small and medium enterprises group.”
ChannelNews understands that Microsoft has agreed to a massive settlement with the ATO in recent weeks.
Jordan said that his office is now assessing sales by multinationals to Australian customers on a comparable basis to sales by Australian-based shopfront retailers, such as Harvey Norman and JB Hi-Fi.
As a result, some tech giants have started to restructure their affairs in line with Mr Jordan’s tough stance, backed by the federal government’s Multinational Anti-Avoidance Law.
Microsoft, for example, had previously booked revenue for many of its sales in Australia in low-tax Singapore, but recently reached a settlement with the ATO under which it would book a higher proportion of sales — and therefore tax — in Australia.
Hisense is also under the microscope after we revealed that the Chinese Company had only declared a profit of $1.7M on revenues of $100,259,000. In 2015, this profit slipped to $1,449,212 in 2016, despite the Company increasing revenues to $150,689,059.
Mr Jordan said his crackdown on foreign multinationals had quickly achieved results. In the 16 months to the end of October, it had flushed out retrospective tax liabilities of $5.04bn from a swag of global giants operating in Australia. Nearly $1bn of this has been raised in the past four months.
Mr Jordan’s comments come ahead of the imminent launch by fellow internet and retailing giant Amazon in Australia.
Tax experts privately believe the ATO is already scrutinising Amazon to ensure it will meet its tax obligations in Australia — with rumours Mr Jordan has dedicated a crack ATO team to investigate the group.