Conroy: ‘Tax The Techies…FULL Whack’

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Look out Google, Apple: Minister for Digital Economy is going after you, likening their tax dodging ways to mining companies.


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Apple could be facing much higher tax bill in Oz if government has its way.
Speaking at CeBIT in Sydney this week, Senator Stephen Conroy warned technology giants (which includes Apple, Google and Adobe) days of paying minimal tax here are coming to a close, if the Gillard government has its way.

“This is a problem that goes across all sectors, so we’re bringing across legislation because we think we’ve got to ensure Australians get a fair share,” Senator Conroy told an audience at CeBIT yesterday, reports AFR.

And Conroy also likened the tax avoidance to mining owners Gina Rhinehart (Australia’a richest woman) and other gizillionaires Clive Palmer, Twiggy Forrest who’s companies record gigantic profits annually, fails to be reflected in its tax bill to the Australian Government.

“[It’s] just like with the mining tax where we want to make sure Australians get a fair share of the wealth that Australians own,”  Minister Conroy warned.

“It’s not owned by these companies, Gina Rinehart does not own these minerals and neither does Twiggy Forrest or Clive Palmer.”

Some of the well known technology names engage in transfer pricing, whereby they pay minimal tax on profits here in Australia, channel them back through foreign subsidiaries, including Holland Ireland and other tax havens, where they pay as little as 1.5% tax.

These global accounting practices are known as the “Dutch Sandwich” and “Double Irish,” allow Apple & Co to pocket millions in profits without having to pay tax to governments in which they operate, the US included, home to most tech firms.

Google Australia reported a net loss of A$3.9m on operating revenue of $201 million for year 2011, paying just over $74K in local taxes.

This revenue figure of $201m comprised $200 m for services provided under agreements with its US parent, Google Ireland and Google Asia Pacific, plus $1 million in interest income.

Apple’s Australian subsidiary made revenues of $4.8bn in the nine months to September last year but paid just $91m in tax – which means its tax rate here was around 0.001%.

The iPhone maker attributed $4.8bn as cost of sales expenses, reports The Australian.

Major techies including Google, Apple and Facebook all have their European base in tax friendly Ireland and have expanded in the last year.

IBM reported a net profit of $309.5 million on total revenue of $4.5 billion, and paid $119m in local taxes.

Employment Minister Bill Shorten announced reform of multinationals tax treatment in Australia last November and vowed to change the transfer pricing rules in tax law.
 
The Treasury are now reviewing the proposals, although they are not likely to go down well with the multinationals, who deny any wrongdoing.

This would force Apple & Co to price intra-group goods and services to “properly reflect the economic contribution of their Australian operations,” Shorten said.

And since the mining tax is soon to come into play, will there soon be a techie tax?

Only time will tell but here’s hoping Google & Co won’t be releasing their god awful ads like their mining counterparts.

“Apple Australia- This Is Our Story’. (Please no). 

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