Multinationals continue to shift profits offshore to avoid paying tax.
Australian businessman, Gerry Harvey, has accused business lobby groups of pushing the interests of profit-shifting multinationals after the release of Apple’s Australian accounts.
Apple turned over more than $6 billion in local sales last financial year, but paid just $80 million in tax. In comparison, Harvey Norman and Seven West Media turned over $1.5 billion and $1.8 billion respectively, and paid $89 million and $94 million in tax. An investigation by Fairfax Media last year showed that, over the past decade, around $8.9 billion in untaxed profits had been shifted from Apple's Australian operations to Ireland.
Speaking about the business lobby groups, Mr Harvey said: “They [multinationals] have lots of lobbyists in Canberra trying to present their case as to why they shouldn't be penalised [over tax]. They're arguing that they should be treated unequally. That's a very hard argument.”
Executive director of the Corporate Tax Association, Michelle DeNiese said: “We agree that large corporates should be paying their appropriate share of tax.”
University of Sydney Business School Professor, Antony Ting said: “It appears that Apple is still able to shift most of its profits from Australia with its tax structure, which most likely is perfectly legal under the current tax law.”
The Australian Tax Office is currently investigating 10 multinationals operating in Australia.
Multinationals, such as Apple, have been shifting profits offshore for decades to avoid paying tax at the Australian rates. Instead, through creative accounting, the profits end up in the company’s Ireland books where taxes are paid at a lower rate.
Just how much these multinationals are moving offshore is anyone’s guess, but a simple comparison of tax paid against gross revenue shows that Apple paid 1.3 per cent compared to Harvey Norman at 5.9 per cent. If Apple was to pay at the same 5.9 per cent rate on its gross revenue, in theory, it should have paid up to $354 million in total taxes. Instead, the company only paid $80 million, so what of the $274 million shortfall?
Governments all around the world have been turning a blind eye to multinationals shifting profits offshore and it’s time they got serious on bringing back the billions in tax lost to corporate tax avoidance each year. Australia must take a stand against profit shifting, by changing the law and working closely over the next decade with the biggest offenders.
What do you think? Should multinationals that shift profits offshore be publically named and shamed? Would knowing this stop you from buying products or services from these companies? Should the Australian government be fast-tracking changes to the tax laws in order to outlaw profit shifting?