Serial Tax Dodgers, Microsoft, Apple + Google Hit With $1B Tax Bill
Tax dodgers, Microsoft, Apple and Google, as well as Singtel the owners of Optus, have been hit with back tax bills close to $1B dollars.
The move by the Australian Tax Office (ATO) to hit these serial tax dodgers, follows extensive forensic examination of the Companies books. All three US technology Companies are now moving to appeal the ATO assessments.
Overall the ATO is looking to recover $3B dollars from seven Australian Companies, Microsoft, Apple, Singtel and Google are four of the Companies that have been labelled as “tax dodgers”.
The ATO’s deputy commissioner Mark Konza said a tax avoidance taskforce of more than 1000 people had forensically examined how these Companies have been ripping off the taxman, pushing profits offshore and “debt dumping” to avoid paying tax.
All three Companies profess to be “good corporate citizens”.
One of the biggest offenders is believed to be Microsoft who have for years systematically transferred the ownership of goods to avoid paying tax.
Apple the Company that charges a premium price for their products, paid $85 million in Australian income tax in 2016, despite making almost $8 billion in local revenue, accounts filed with the corporate regulator show.
Its tax bill is slightly up from the year before when it paid $80.3 million, but a fraction of its overall $7.9 billion sales revenue (up from $6 billion in 2014).
For the year ended June 30, 2016, Microsoft Australia reported an AU$92.2 million in profit, they paid AU$36.4 million in tax, Revenue for the 12 months was AU$725.8 million.
These payments were made as ATO forensic accountants crawled through the Companies books. In prior years Microsoft’s tax contributions, have been significantly lower.
Last year Google Australia was forced to restructure their local operations, they vowed that in the future it will count its lucrative advertising revenue locally on its tax bills.
The accounts show that in 2015 Google paid $16 million tax on revenue of $501.8 million and profit of $50 million.
Revenue was up from $438.7 million in 2014, but profit was down from $58.7 million in 2014. After income tax, profit amounted to $47.1 million – down from $49.3 million in 2014.
Google’s cashflow statement said income taxes paid in the 2015 period was $16.6 million, up from $13.7 million the year before.
But its income tax expense – a more accurate measure – was $16 million, up from $11.7 million a year earlier. After an adjustment for prior year tax and deferred tax expenses, its total income tax expense came in at $2.86 billion, down from $9.46 billion the year before.
The accounts also show it has $71.6 million of what is known as “deferred tax assets” on its balance sheet, a credit which it can theoretically use to reduce future tax bills over an extended period.
Revenue and Financial Services Minister Kelly O’Dwyer said the ATO would not back down.
“Mums and dads pay tax, they can’t avoid it and do it because they know their tax goes towards paying for hospitals, schools, roads, defence,” she said.
“My message to overseas is the Australian community is sick of companies that don’t pay the right amount of tax in Australia. We’ve got the law and determination to do something about corporate tax avoidance,” she said.
“The Australian government will make sure that everyone pays the tax that they owe whether they’re big multinationals or other individuals.” she added.
News Corporation said that after sending the tax bill to the seven corporate giants, Mr Konza, who has flown to Silicon Valley twice to warn the companies in person, was immediately contacted by three of the firms. One has already flown its corporate tax team to Australia to begin negotiations.
“It’s painstaking work to get all their company accounts from around the world, to go through them to unpick how they’ve been reporting the sales and calculating the profit just to make sure that the profits they declare in Australia are right,” he said.
“In those $2.9 billion worth of assessments, we have a number of large assessments for tax who had not been billing their profits in Australia but had been pushing them offshore. We’ve also got some big assessments in there for people who had been debt dumping in Australia, to avoid Australian tax.”
The ATO expects some of the seven companies to settle, and others to pursue litigation in the Federal Court.