Inquiry into how Apple, Google and Microsoft rob Australians by not paying Aus taxes

[Billi]

No. I had the impression that you said something totally different: it is okay what they are doing, it's just the law.

(And it's money that's missing in your country too while these companies are happily using all your tax-paid infrastructure.)

[HarryT]

Originally Posted by Billi

No. I had the impression that you said something totally different: it is okay what they are doing, it's just the law.

If a company is breaking the law, the legal system is there to take action against them.

If a company is not breaking the law, but the government decides that what they are doing should be illegal, the government should introduce the appropriate legislation.

But unless or until such a change in the law is made, a company should not (IMHO) be "vilified" for conducting business legally.

[Billi]

Originally Posted by HarryT

If a company is breaking the law, the legal system is there to take action against them.

And if the legal system is closing all eyes it has, does this make these actions any more legal?

[Lynx-lynx]

Originally Posted by HarryT

That being the case, why do they not simply instigate legal proceedings for tax evasion against the companies involved? Why is an enquiry needed?

Here's the Terms of Reference: http://www.aph.gov.au/Parliamentary_...s_of_Reference

Spoiler:

Tax avoidance and aggressive minimisation by corporations registered in Australia and multinational corporations operating in Australia, with specific reference to:

1. the adequacy of Australia’s current laws;
2. any need for greater transparency to deter tax avoidance and provide assurance that all companies are complying fully with Australia’s tax laws;
3. the broader economic impacts of this behaviour, beyond the direct effect on government revenue;
4. the opportunities to collaborate internationally and/or act unilaterally to address the problem;
5. the performance and capability of the Australian Taxation Office (ATO) to investigate and launch litigation, in the wake of drastic budget cuts to staffing numbers;
6. the role and performance of the Australian Securities and Investments Commission in working with corporations and supporting the ATO to protect public revenue;
7. any relevant recommendations or issues arising from the Government’s White Paper process on the ‘Reform of Australia’s Tax System’; and
8. any other related matters.

In short, the inquiry is establishing who is doing what (both national and multi national corporations) to avoid paying taxes and how many companies are involved. The way ahead will likely be changes to the Tax Act and other activities associated with scheme minimisation.

As to why these companies haven't had legal proceedings instituted against them, then point 'd' 'the opportunities to collaborate internationally and/or act unilaterally to address the problem' is one of the issues under reference.

The important point is that the Senate Inquiry is taking place and that multi national companies with a presence in Aus have been 'invited' to participate. The degree to which all the invited companies have (individually) schemed to avoid the payment of Aus taxes is one of the outcomes of the inquiry.

You don't think that Starbucks should have been made to pay UK taxes? (in link posted earlier: http://theconversation.com/multinati...rackdown-23421)

Despite the extra scrutiny facing US multinationals since 2012, when Starbucks
agreed to “voluntarily” pay company tax in the UK, tax avoidance activities appear not to have slowed.

[HarryT]

Originally Posted by Lynx-lynx

You don't think that Starbucks should have been made to pay UK taxes? (in link posted earlier: http://theconversation.com/multinati...rackdown-23421)

Personally, no, I don't. They weren't breaking the law; to my mind, dragging their name through the mud for doing business in an entirely legal manner was little short of blackmail. But that's just my personal opinion, of course.

[Lynx-lynx]

Originally Posted by HarryT

Personally, no, I don't. They weren't breaking the law; to my mind, dragging their name through the mud for doing business in an entirely legal manner was little short of blackmail. But that's just my personal opinion, of course.

Yes, we have polarised opinions on this matter.

[murg]

Originally Posted by HarryT

If the companies are acting illegally, then of course they should be prosecuted, but what is the difference between "tax avoidance" and "minimising your tax bill by legal methods"? Can you explain for the benefit of us non-Australians?

Here in the UK, "tax evasion" is the crime of not paying the taxes that the law requires you to, but "tax avoidance" is employing legal methods to minimise your taxes, which is precisely what companies pay accountants to do.

In Australia, we have Part IVA, which basically says that if you enter into a scheme with the sole purpose of avoiding tax, that scheme is illegal and can be declared void.

https://www.ato.gov.au/General/Gen/P...or-income-tax/

[Shane R]

Originally Posted by Lynx-lynx

But then JB Hifi pays Apple Singapore with the proceeds of that consumer's payment. Therefore they avoid Australian taxes.

Correction, the manufacturer avoids Australian taxes, while presumably paying them in Singapore.

The individual buying the device pays sales tax, correct?
And JB HiFi pays income tax on the sale of the device too, I'd assume.

Sounds like the Australian gov't is looking around for even more tax revenue. If so, it should be as easy as tweaking their laws to add import taxes or such.

[crossi]

Why don't the legislators get off their lazy butts and change the laws to make it impossible to evade the tax that way? That is their job isn't it to write laws so they have the effect they want? If the law was so badly written to have such big holes in it then it was entirely their fault. Why did people vote for stupid lawmakers anyway? Get some with brains.

[Tarana]

If it is legal, how can it be cheating or a scam?

I don't know how Australian law reads, nor very knowledgeable about importation taxes, but there are two transactions here. One is a wholesaler to a business (is that taxable?) and the other is a business to a consumer (definitely taxable). So, in the US, at least, the out-of-country business pays import duties, not consumer level taxes. Usually a big difference. However, if the business is merely a 'front' for the out-of-country business, then they have a presence in that country and would indeed have to pay taxes on sales to consumers.

[RobertDDL]

Originally Posted by HarryT

If there is a "loophole" in the law, then the law needs to be changed, but I really don't think that you can blame anyone for minimising their tax bill by entirely legal methods.

Yes, but big business knows how to have laws and loopholes tailor-made to suit their needs, an option which is not that easily available to the rest of us. (And yes, it happens in Europe, too -- just think Luxemburg or Ireland. Only now that most states are really strapped for cash are they making some feeble attempts at fixing some of those loopholes.)

[HarryT]

Originally Posted by RobertDDL

Yes, but big business knows how to have laws and loopholes tailor-made to suit their needs, an option which is not that easily available to the rest of us. (And yes, it happens in Europe, too -- just think Luxemburg or Ireland. Only now that most states are really strapped for cash are they making some feeble attempts at fixing some of those loopholes.)

In this case, though, we appear to have a situation of a government accusing companies of exploiting loopholes in the laws of their own country. Laws that they themselves have made. And far from being an impartial enquiry, the title of this thread strongly suggests that the outcome has been pre-determined.

[fjtorres]

Originally Posted by HarryT

In this case, though, we appear to have a situation of a government accusing companies of exploiting loopholes in the laws of their own country. Laws that they themselves have made. And far from being an impartial enquiry, the title of this thread strongly suggests that the outcome has been pre-determined.

Odds are it is political grandstanding to make it look like they want to *do something* while understanding that if they actually do something the reactions and consequences won't be good for them.

We get it all the time in the US Congress; they hold hearings, bring in celebrities or CEOs, get some press, do some handwringing, go home and do nothing.
It's political spectacle for the peanut gallery.

[Shane R]

Originally Posted by fjtorres

Odds are it is political grandstanding to make it look like they want to *do something* while understanding that if they actually do something the reactions and consequences won't be good for them.

Hey, the PM gets all the new toys weeks before anyone else. He's not gonna endanger that.

[Doonge]

There really should be a word for this.

When people share ebooks, some people call it stealing. But nothing was stolen.
When people evade taxes, some people call it robbing. But nothing was robbed.

The title is misleading because at first I thought Apple paid NO taxes to Australia. But they do pay some. The problem is about the amount, and how neighbouring countries have better tax rates.
I'm reading that the Australian law is that you cannot legally game the system? With a law like that, I guess we don't need any more lawmakers: let's just say people have to understand the spirit of the law, no matter how badly it is written, and in doubt should just ditch out money to the governement.