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Monday, 20 May 2019 05:04

Big-tech tax avoidance a thorny issue for new Morrison govt

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Big-tech tax avoidance a thorny issue for new Morrison govt Pixabay

One of the big problems in tech that the incoming minister for the digital economy will have to fix is the matter of getting big tech multinationals to pay their fair share of tax.

With Michael Keenan having retired at the election, exactly who will fill his shoes is unknown. But whoever it is, that individual will have to confront big tech – and two companies from among that lot have more or less just given the government the finger.

According to The Australian, Facebook recently filed documents with ASIC showing that it had paid about $12 million in tax for 2018 - after earning more than $600 million in ad sales. But it showed $454.9 million in costs to an overseas subsidiary, leading to a net revenue of $125.5 million.

The company showed $23.3 million as profit and paid $11.8 million in tax.

Google was no less parsimonious when it came to paying tax. The search giant made more than $1 billion in revenue in Australia in 2018 but paid $49 million in income tax.

Both these companies — along with others like Amazon, Apple and Microsoft — claim that what they are selling is due to products created in a low-tax country like Ireland. A major portion of their revenue is attributed to that country even though the sales are in Australia.

And, hey presto, when they present their balance sheets, they pay very little tax.

In an interview with iTWire before the election, the Shadow Minister for the Digital Economy Ed Husic said that working out how to deal with big tech would be "the hottest game in town" within government.

But Husic is not going to be in the ministerial chair, so one has to hope that the person who takes that post shows the guts needed to tackle a bunch of corporates who are used to glibly getting past governments around the world.

The government has been pursuing these firms for at least the last four years, in order to get them to pay what they owe. In 2015, the heads of Google, Microsoft and Apple appeared before a Senate committee which was inquiring into their tax structures and seeking to understand why they steadfastly refused to pay what they had to under the law.

No company ever shows the slightest bit of shame in hiding their activities if they can pay the least amount and get away with it.

For quite some time, the government has talked tough about getting the multinationals to fall in line but nothing practical has happened. In 2017, for example, Scott Morrison, then the treasurer, claimed the government had introduced what he characterised as the "toughest" multinational tax avoidance laws.

But if these laws only brought in the pathetic amounts that Facebook and Google declared for 2018, then they are just a waste of time. Brave talk is all well and good. Just show us the money, prime minister.

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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