David Stuart

Crackdown push after Apple 'shifts $9b profits offshore'

THE peak group for Australian taxpayers has called for a crackdown on international firms avoiding tax through offshore havens.

The call from Taxpayers Australia came after US tech giant Apple was accused of shifting $8.9 billion in untaxed profits from its Australian operations to Ireland over the past decade.

Taxpayers Australia's Head of Tax, Mark Chapman, said: "Today's disclosures about Apple highlight that there is no level playing field for Australian businesses when it comes to tax. 

"Firms like Apple are able to set up complex structures which see all their profits siphoned into an Irish holding company which, astonishingly, pays no tax at all anywhere in the world, whilst its Australian operations are no more than low margin shop fronts fully taxable on tiny profits because they are loaded with costs charged by overseas Apple entities."

Last tax year alone, Apple reported pre-tax earnings of a mere $88.5 million while it simultaneously sent an estimated $2 billion of income from Australian sales to Ireland via Singapore, where it had previously negotiated a tax deal.

"This is all legal but decidedly unfair," Mr Chapman said.

Apple has not formally responded to the claims in the Australian Financial Review but made it clear it was meeting all of its obligations under Australian tax laws.

Apple says the figures used as the basis for the AFR article were from 2000 to 2009 with no more recent figures.

Apple has not confirmed the accuracy of the figures used by AFR.

The revelations about Apple follow last month's G20 meeting of finance ministers in Sydney, which agreed to new measures to crack down on international tax evasion, including the automatic exchange of information between member nations.

Taxpayers Australia said that the key to fixing the problem is to redesign international tax laws.

"The best outcome would be that all companies pay tax once somewhere, even if it isn't Australia," Mr Chapman said.

"That way, tax-free entities like Apple's Irish operation will simply cease to be viable."

"In addition, there needs to be a push towards disclosure and transparency so that consumers can see how much profit multinationals earn, how much tax they pay, where they pay it and what their global and local tax policies are," he said.

"When consumers have that information, they'll be able to make informed decisions about which companies they want to deal with which could give locally based operations - who play fair by their local tax systems - the chance to gain a competitive advantage."

The Australian Financial Review found Apple had shifted the $8.9 billion in untaxed profits from Australia.

The newspaper said it had obtained 10 years worth of financial accounts for Apple Sales International, the secretive Irish company at the heart of Apple's international tax arrangements, which reveal the mark-up Apple charges for intellectual property on its products around the world.

"Newspapers have had lots of stories about tax avoidance by Microsoft and Google and Apple, but there are hardly any numbers," said University of Sydney senior lecturer of taxation law Antony Ting, who has published a review of Apple's tax arrangements.

"Now, for the first time, there are numbers for the profits that escaped from Australian tax."

Read more at Financial Review


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