In the revenue leeching stakes, Apple is by far the worst offender followed by Microsoft, with Google bringing up the rear only by the virtue of its Australian R&D activities.
The contempt with which all three companies view the Australian Government and the Australian people was obvious by the personnel they chose to front the Senate committee.
Apple and Google presented their local bosses, Tony King and Maile Carnegie, both which admitted to having little knowledge of their respective companies’ corporate tax structures and were subsequently tied in knots under heavy questioning. Microsoft, at least, provided Bill Sample, a senior corporate tax specialist from its Redmond headquarters, who spent much of his time easily fielding questions with a bemused half-smile, as if nothing really mattered.
As the almost two-hour hearing wore on, the extent and means by which the three iconic tech companies have been pillaging Australia became apparent. Apple’s Tony King made it patently obvious when under heavy questioning by Senators Christine Milne and Nick Xenophon, he revealed that Apple Australia is a subsidiary of Apple Ireland.
Why on earth would Apple Australia be a subsidiary of Apple Ireland?
One does not need to understand such exotic corporate tax structures as a “double Irish Dutch sandwich” to get a feel for how Apple in 2014 got to make a pre-tax profit of $250 million and pay just $80 million of tax on $6 billion of revenue in Australia.
According to Tony King, the ATO has been fully aware of Apple Australia’s product sourcing arrangement under its previous but now expired Advanced Pricing Agreement. King attempted to justify the practice by claiming that Apple Australia should pay the same amount as any other company that sourced product from an overseas Apple supplier. Farcically, King even attempted to ameliorate Apple’s predatory fleecing of Australian tax coffers by pointing to the $600 million of GST paid on Apple sales in 2014 – money paid not by Apple but Australian consumers.
If you wish to visit this site and compare Apple’s global pre-tax profits as a percentage of revenue over the past five years, it becomes apparent that Australia has missed out on at least $2 billion in tax revenues. However, this has been going on much longer than five years.
Needless to say, both Microsoft and Google are guilty of similar practices to Apple.
Under questioning, Microsoft’s Bill Sample unflinchingly revealed that of the company’s Australian revenue in 2014, $2 billion was taxed in Singapore, which has a corporate tax rate of 17%, while just $100 million was taxed in Australia!
Google’s Maile Carnegie revealed that all of the company’s massive Australian advertising revenue is taxed in Singapore while the relative pittance in services that Google Australia provides to Google Singapore is taxed in Australia. In 2014 Google Australia paid just $7 million in tax.
While all three of these iconic companies and almost certainly many other multinational tech players are culpable of unconscionable behaviour, they could not get away with it without the compliance of successive Australian governments.
Regardless of their political persuasion, our two major political parties have demonstrated on numerous occasions that they put the interests of big global business ahead of rank and file Australians. It is perhaps indicative of this fact that the two most forthright voices heard in the recent Senate hearing were that of Greens leader Christine Milne and Independent Senator Nick Xenophon.