“The Australian government on Monday announced a world-leading crackdown on alleged tax avoidance by 30 multinational companies in a move that could force the likes of Apple Inc and Microsoft Corp to restructure their businesses to escape huge penalties,” Jane Wardell reports for Reuters. “‘These companies are diverting profits earned in Australia away from Australia to no-tax or low-tax jurisdictions,’ Treasurer Joe Hockey told reporters in Canberra.”
“He declined to identify the targets, but said ‘it’s pretty evident which companies are involved.’ Google Inc, Apple Inc and Microsoft Corp revealed earlier this year they were under review by the Australian Tax Office,” Wardell reports. “Hockey did not detail the content of the proposed new laws, but said they would not contain a profits diversion tax like the ‘Google tax’ introduced by Britain on April 1.”
Wardell reports, “One country watching more warily than most may be the United States, which originally backed the G20 crackdown but has since become concerned about Britain, Australia and other nations lining up against U.S. digital companies as they seek extra revenues to trim budget deficits.”
Read more in the full article here.
MacDailyNews Take: Apple’s giant stinkin’ pile of money attracts all sorts of greedy flies.
Oh, BTW: Tax avoidance is perfectly legal.
Oz is so far ahead of other countries they are probably already in Tuesday.
Why is it when you have money and follow the letter and intent of the law, so many rant and rave and insinuate you are a crook, but when you are poor or lazy, the law does not apply to you?
Actually, in most instances, it’s the other way around. Laws that apply to you and me don’t often apply to the 1 percent.
What a load of shit.
Because Australia, flush with money from its economic boom fueled by mining taxes, is now in a huge bind because it committed to paying a ton of new public benefits that it now can’t afford because the prices for iron ore have plummeted, thus the tax revenue has plummeted. So what’s a politician to do? Why, pass a new tax law aimed at huge international companies which did nothing wrong but comply with your laws, the same laws which were on the books before and after you were swimming in tax money.
Interesting points. From my POV, the problem is willful avoidance of taking personal responsibility for one’s choices and actions. This is a human problem all over the wealth spectrum. It’s not about money, which is merely a game system superimposed on the base problem
These countries forget how much VAT revenue has been contributed by $AAPL 15 to 20% at retail PX. Far greater than any foregone income taxes.
VAT – or GST as it is called in Australia – is not paid by companies but by the final consumer.
Companies charging VAT are merely collecting it on behalf of the local tax agency and they claim anything they pay out against what they receive.
The interesting thing, taxes are usually paid for, by the consumer, as those “losses” are business expenses, and contribute to the cost of the product. So when Australia passes laws to patch the loopholes, which was meant for their own companies, they will cause a rise in costs to the very people they are supposedly trying to protect.
With that said, if you don’t like the rules, you change them. Likewise when you change the rules, you must suffer the consequences.
If taxes are levied fairly on all companies, then the company that is most efficient will be able to operate at a profit without passing as much costs to the consumer as its inefficient competitors will. Thus if you want to eliminate waste, tax resource use, waste disposal, financial transactions, etc and watch as companies get lean and consumers get smart. If governments keep letting corporations write all the rules, then the end consumer will be raped and the corporations will get fat and lazy. Many corporations are already bloated and inefficient — even Apple. It’s not the scrappy underdog it used to be. Now it devotes as much resources to tax avoidance as it does in software interface design.
I have a hard time with the term “Tax Avoidance.” Maybe a better term is “Tax Literate.” Where one seems wrong and the other wise. It would seem literacy is meant for the elite and friends of the elite. It’s another way the rich benefit at the expense of the commoner. I mean somebody has to pay the bills. Let it be the ignorant, never mind they are intended to be so.
The small business owner and the individual citizen has practically no lobbyist power ensuring that tax laws are written with loopholes for them. Multinational companies, on the other hand, have bought and own legislatures in most “democratic” nations. Hurray for Australia for taking a step to review their tax code.
Funny how the same people who bitch & moan about patent trolls and demand that their government — the expensive well-established democratic government — take steps against such parasitic corporate leeches. Then in the next breath these people lionize tax shelter trolls that offer nothing but a place to hide money, keeping it out of world circulation and putting direct downward pressure on all economies. Wierd.
It’s going to be a tough crackdown, I mean these Anustralians are well beyond the terrorists, the nazis heck even beyond fifth rate nations like the US when it comes to scum.
The latest onslaught against the world comes from their prime minister “Tony Abbott has said that only the Coalition could stem the flow of asylum seeker boats because other governments would “succumb to the cries of the human rights lawyers””
The Anustralian culture is beyond evil and I applaud it’s total annihilation from the planet.
As any reasonably educated person would know, Australia has actually increased its refugee intake.
The crackdown on asylum seeker boats is an attempt to reduce or eliminate refugees dying at sea in unseaworthy boats operated by unscrupulous people smugglers who don’t care for the safety of their passengers.
Reading the source article, this is what I see:
1) There has been NO tax avoidance. That’s not what Australia is talking about at all.
2) Australia is using this rhetoric as a mask behind which they’re hiding a new law to jack up taxes on multinational companies operating in Australia. IOW: NEW TAXES. Not avoidance of old taxes.
Australians will have to decide if that’s a good thing or a bad thing.
And again: Any new law in Australia cannot be ‘Ex Post Facto’. IOW: They can’t apply any new law to the past. When the law starts (presumably 2016-01) that’s when the new taxes apply, not earlier.
If a company uses the tax law to their full benefit, then they are – at least in that sense – fulfilling their legally mandated fiduciary obligations.
If a government considers a certain thing to be a “loophole,” that is merely a reflection of the potential inefficiency of their tax law. If they don’t like the law, then they can always change it.
If a company is following the law, then the government has nothing to say about it. Apple has no obligation to make any government happy or rich.
Governments are parasites!
By the same logic, no company should have an office in expensive cities like NYC, Tokyo, London, etc. And Apple should immediately vacate its Cupertino headquarters, because taxes are high in CA. If Apple and all those Fortune 500 companies were headquartered in a 3rd world country, they could make investors much more money … right?
Or perhaps the governments that you claim to be parasites actually provide superior infrastructure and services that enable these companies to be as successful as they are? Think about it. Can all Fortune 500 CEOs be so stupid as to remain in the USA when there are 200 other nations in which to relocate? I think not. The few CEOs who have left the USA to pop up their shops in other nations have not found greater success, and millions of people are clamoring to become US citizens despite your strong hinting that the state or federal governments are working against their companies or citizens.
I agree with Mike. Governments have red tape only because corporate lobbyists want to make their bureaucracy look more efficient. Let me tell you — the efficiency of a corporation is not any better than a government of equivalent size. The difference is that a government’s goal is never to make money, and most corporations only goal is to screw anyone they can out of their money.
Tax loopholes can and should be exploited until they’re closed. Although I’m unsure of the consequences of Hockey’s plans in the absence of multilateral action.
I love it how these endless articles are always carefully worded to imply illegal activity, and I’ll bet that’s the conclusion that 90% of the public will draw.
Unfortunately the many companies supplying the untaxed “digital goods like movie downloads, games and e-books from overseas” won’t have the balls to just pull out of the relatively tiny Aussie market.
That’s ’cause it’s not tiny. They make a truckload of money in the worlds 12th biggest economy, otherwise they wouldn’t be there in the first place.
Companies operating in Australia or any country are perfectly entitled to utilise the local laws to avoid as much tax as they legally can.
Similarly, the Australian government is perfectly entitled to close loopholes in its tax laws which allow companies operating their to pay only a small fraction of their profit.
Apple Australia pays only a tiny fraction of its revenue because it “pays” offshore entities in places like Ireland for the intellectual rights and production costs of the goods it sells there.
Those entities are set up purely to receive the revenue and are not actual operating arms of Apple which incur the costs of developing the intellectual property. That is mostly undertaken in the USA, China, Israel and other places that Apple has production and R&D facilities.
I believe all companies should pay a fair share of the profits they make in the countries in which they sell their goods and not rely on money transfers in order to generate profits.
As for the size of the Australian market, Australia is the 12th largest economy in the world and has a very high market penetration rate for Apple products so I doubt Apple would want to exit the market.
Ok, how about a new global tax law. You pay the percentage of your profits equivalent to the percentage of the expenses you have in each company you do business in. Money may move freely internationally otherwise. No loss in a single country will release you from paying taxes in that country if you make a profit overall globally. This will eliminate tax shelters and simplify the tax code for international companies. e.g. if your total profit is $10Billion and tax rate is 30% in country A but only 10% of your global business expenses occur there your tax payment would be 30% of (10% of 10billion) or $300milion. Likewise if you had no business expenses in Country C you would pay no taxes there since it is obviously a tax shelter doing no work whatsoever.
Whoops.. First ‘company’ should be ‘country’.
MDN: Tax avoidance is criminal. You are confusing tax avoidance with tax minimisation, which is perfectly legal.