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Australia’s Going After Apple And Google’s Tax Payments

by | 3rd, October 2014

Or perhaps we should say that the Australian Parliament is going to look into the tax payments that Apple and Google don’t make in that country. I’m sure they’ll produce a lovely report and that they’ll complain mightily. But it’s very difficult indeed to see what they might actually be able to do about it:

The upper house yesterday supported a motion from Greens leader Christine Milne for the committee to examine and report on the “tax avoidance and aggressive tax minimisation by corporations registered in Australia and multinational corporations operating in Australia”.

Or as another report has it:

Milne suggested that by pulling up some of the largest businesses operating in Australia on their tax domestic commitments, the government could plug its revenue shortfall without removing funding from social services.

“Instead of pulling safety nets out from under people in our community who most need support, the Abbott government should look for ways to raise revenue from those who can afford to pay,” said Milne in a statement.

The inquiry, which will look at “tax avoidance and aggressive minimisation by corporations registered in Australia and multinational corporations operating in Australia”, is set to place in its cross hairs some of the biggest technology companies operating in Australia, including Apple, Google, and Amazon.

The federal government has previously called out companies such as Google and Apple for using 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 Google’s advertising and Apple’s products sold in Australia.

The thing is that there’s really not very much at all that the Australian government can do about this. There’s something the US government could do, sure, but that wouldn’t change the amount of tax paid in Oz. There’s also something the Irish government could do but that would change the amount of tax paid in Oz. And whatever the Oz government decides to do isn’t going to change the amount of tax paid in Oz either.

For, what the two companies do, both Apple and Google, is to sell their products into Australia having manufactured them elsewhere. They thus pay whatever import duties there are (not very much if anything) and that’s it. All the profit they’ve made by making those things just isn’t made in Australia: thus there’s no profit tax paid in Australia.

And it really is that simple. Other than trying to increase import duties, thereby screwing up the entire world trade system, there’s just nothing Oz can do about it.



Posted: 3rd, October 2014 | In: Money Comment (1) | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink