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

[AnotherCat]

Originally Posted by Lynx-lynx

...But hey, at least the issue is being discussed at the top levels, and hopefully making the tax (thieves imo) nervous. (Yeah, I know there are a number of people here who will stand on their far right hind legs and yell and scream about that expression ..... stiff!)

You can only call them "thieves" if you have some knowledge of taxation and also have detailed tax accounts showing malpractice of the companies which you criticise.

It seems likely that neither of those apply so I wonder what drives your apparent hatred of international corporations. Ideological or political convenience perhaps, and apparent ignorance of the subject?

If it were otherwise you would be much more circumspect before calling such corporations "thieves" and those who have a different view than yourself as standing "on their far right hind legs" and who "yell and scream"? The latter comment could, for example, be easily seen to be a cheap dismissal of the explanations I gave; in which case I might be thinking that I should not have bothered if it were not for the fact that a number here have actually thanked me for that contribution.

You would also be giving explanations in a technical manner as to why you hold such a denigrating opinion of such corporates. Instead you just appear to parrot those who for political convenience, ideology or just plain ignorance hold views that are apparently similar to your own. You are, of course, entitled to indulge in such parroting.

But to ameliorate that appearance I would be interested to know what your stances are, with technical justification, on just a few examples:

1. What do you class as a company tax level at which you consider a corporate is taking advantage of that by having a subsidiary there e.g. 0%, 15% (e.g. Hong Kong), 28% (e.g. NZ which is considerably lower than Australia) and why.

2. What credit do you think should be given to a parent company, in such cases of your wanting their tax liability to be in multiple countries, for a subsidiary in a zero company tax country but which pays other large non company taxes such as a central government payroll tax or sales taxes on its inputs? Give your analysis of the pros and cons.

3. What credit would you give in the case of 2. where the payroll tax is not a central (e.g. federal) government tax but a state and territorial one such as in Australia? And how would you handle any credit for the other taxes unique to the subsidiaries jurisdiction but which do not apply in the parent's?

4. Do you believe that intercompany transfer payments (e.g. interest on borrowings from parent, royalties, technical support, etc.) over borders should be deductible to the company making them (i.e. the effect is they are {Edit} not taxed on them)?

5. In the case of 4. if you believe they should not be so then do you think they should be so for non related companies (e.g. payments by a company in one country to one in another unrelated company for use of designs, branding, etc.) and why, in technical terms, do you make the distinction? Furthermore, do you believe that the same type of payment between unrelated companies within the same country (e.g. for use of brand, franchise support)

6. In the case of 4. if you believe they should not be so then do you claim that the company receiving the payment should also be taxed on them (and so in effect they are doubly taxed)?

7. If a you claim, as it seems you do, that the parent of a subsidiary in a zero company tax country should pay tax on the subsidiary's profits then do you claim that that tax payment should not flow as a tax credit through imputation to its shareholders when the profit is distributed to them as dividends? Why?

8. If in the case of 7. you claim there should be no credit then why do you believe that the result that the profits will be taxed twice is just?

Plenty more but I'll leave it at that.

As I have pointed out, in western tax jurisdictions the Revenue is able to audit and challenge intercompany transfer payments claimed as deductions, made by international subsidiaries to their overseas parents or between unrelated companies and contest those if considered inappropriate (in fact they can normally place their own valuation on them and leave the company to challenge them in court should it disagree).

Instead of the political grandstanding apparent in Australia the Government here (with no apparent criticism by the opposition) seems to have taken a more balanced view based on good sense in that they have just reiterated that such payments will be audited by the Revenue and if need be the Revenue's budget will be increased in order for them to do so.

For the sake of understanding, I do believe that everyone should pay their taxes, but unlike some I only claim that they should be paying what they are legally obliged to under sound legislation; not what those with views which spring out of ideology, political convenience or ignorance claim.

[eschwartz]

Originally Posted by AnotherCat

You can only call them "thieves" if you have some knowledge of taxation and also have detailed tax accounts showing malpractice of the companies which you criticise.

It seems likely that neither of those apply so I wonder what drives your apparent hatred of international corporations. Ideological or political convenience perhaps, and apparent ignorance of the subject?

If it were otherwise you would be much more circumspect before calling such corporations "thieves" and those who have a different view than yourself as standing "on their far right hind legs" and who "yell and scream"? The latter comment could, for example, be easily seen to be a cheap dismissal of the explanations I gave; in which case I might be thinking that I should not have bothered if it were not for the fact that a number here have actually thanked me for that contribution.

You would also be giving explanations in a technical manner as to why you hold such a denigrating opinion of such corporates. Instead you just appear to parrot those who for political convenience, ideology or just plain ignorance hold views that are apparently similar to your own. You are, of course, entitled to indulge in such parroting.

[...]

Yeah, I love hearing, like, actual reasons for stuff.
Eagerly awaiting further word...

[RobertDDL]

Originally Posted by AnotherCat

so I wonder what drives your apparent hatred of international corporations. Ideological or political convenience perhaps, and apparent ignorance of the subject?

This question coming from someone who has just (in a different thread) called the European Commission "socialist gnomes," wo "are running out of things to screw others with"?

[Lynx-lynx]

@AnotherCat, ummm, the title of this thread includes the word 'rob', so ...... that is to permanently deprive Australians of due tax by use of arrangements that are aggressive towards the tax system. (That is, use Singapore as a hub.)

My earlier posts are indicative as to any further responses that I have to your statements.

We are polarised on this point AnotherCat, I accept that.

(With reference to this statement:
'The latter comment could, for example, be easily seen to be a cheap dismissal of the explanations I gave; in which case I might be thinking that I should not have bothered if it were not for the fact that a number here have actually thanked me for that contribution.'

I think that you've taken my comments as being aimed at you - nope!)

[tompe]

Originally Posted by AnotherCat

For the sake of understanding, I do believe that everyone should pay their taxes, but unlike some I only claim that they should be paying what they are legally obliged to under sound legislation; not what those with views which spring out of ideology, political convenience or ignorance claim.

This seems circular or strange.

What defines what the taxes are? Is it the intention of the system that defines it? Or is it the letter of the law. If it is the letter of the law you do not believe everyone should pay there taxes. You are just believing that everyone should follow the rules to the letter and if they can get away with not paying it is OK.

I think everyone should pay there taxes and if the people writing the laws mess up so loopholes exists you should still pay the taxes as intended.

[shalym]

Originally Posted by tompe

This seems circular or strange.

What defines what the taxes are? Is it the intention of the system that defines it? Or is it the letter of the law. If it is the letter of the law you do not believe everyone should pay there taxes. You are just believing that everyone should follow the rules to the letter and if they can get away with not paying it is OK.

I think everyone should pay there taxes and if the people writing the laws mess up so loopholes exists you should still pay the taxes as intended.

Hmmm...so which "loopholes" are you talking about here? Does that include any portion of tax law which could lower the amount of tax owed, for anyone? Or do "loopholes" only count if a person/entity is making more than a certain amount?

Shari

[HarryT]

It's one thing to want companies to pay the appropriate amount of tax, but you need to be careful not to set up a tax system that's hostile to big business, or those companies will simply base themselves elsewhere. A company which pay a small amount of tax and employs 1,000 people in Australia is a lot better than a company which is not based in Australia, pays no tax, and employs nobody.

Most countries offer "tax breaks" to multinationals to encourage them to open offices in that country.

[tompe]

Originally Posted by shalym

Hmmm...so which "loopholes" are you talking about here? Does that include any portion of tax law which could lower the amount of tax owed, for anyone? Or do "loopholes" only count if a person/entity is making more than a certain amount?

Shari

I am talking about effects that was not the law makers intention.

[shalym]

Originally Posted by tompe

I am talking about effects that was not the law makers intention.

See...that's where things get strange. How do you know what the law maker's intentions were, unless those intentions are laid out when the law is created? If the intentions were laid out at the time, then why aren't those intentions part of the actual law?

Shari

[tompe]

Originally Posted by shalym

See...that's where things get strange. How do you know what the law maker's intentions were, unless those intentions are laid out when the law is created? If the intentions were laid out at the time, then why aren't those intentions part of the actual law?

Easy, you look at what the law makers say the intention is. Then when you are going to fit these intention in a complicated system it is easy to fail in the implementation. I do not see why you think this is hard.

[HarryT]

Originally Posted by tompe

Easy, you look at what the law makers say the intention is. Then when you are going to fit these intention in a complicated system it is easy to fail in the implementation. I do not see why you think this is hard.

But the law has to operate on the basis of what the legislation actually does say. To do otherwise is to act in an arbitrary manner. If the law doesn't say what it was intended to, it should be amended.

[shalym]

Originally Posted by tompe

Easy, you look at what the law makers say the intention is. Then when you are going to fit these intention in a complicated system it is easy to fail in the implementation. I do not see why you think this is hard.

Ok. So if it's clear what the intention is, then WRITE IT INTO THE LAW. How hard is that? If the law isn't crystal clear as to intent in all cases, then it is a flawed law.

Shari

[shalym]

Originally Posted by HarryT

But the law has to operate on the basis of what the legislation actually does say. To do otherwise is to act in an arbitrary manner. If the law doesn't say what it was intended to, it should be amended.

Exactly this. Amend it and keep amending it until it is clear as to what is and is not allowed. If an "intent" can be clearly stated, then it can be written into the law. If the "intent" is to have certain tax laws apply to large companies differently than they do to smaller companies or for individuals, then make that clear in the law.

Shari

[tompe]

Originally Posted by HarryT

But the law has to operate on the basis of what the legislation actually does say. To do otherwise is to act in an arbitrary manner. If the law doesn't say what it was intended to, it should be amended.

Yes. And if your moral principle is to pay taxes you should pay what is intended and not minimize according to loopholes you can get away with. You should not use a bug in the implementation.

Sometimes you also have a law that say that transactions whose only purpose is to reduce tax is not allowed.

[shalym]

Originally Posted by tompe

Yes. And if your moral principle is to pay taxes you should pay what is intended and not minimize according to loopholes you can get away with. You should not use a bug in the implementation.

Sometimes you also have a law that say that transactions whose only purpose is to reduce tax is not allowed.

...How do you prove that the only purpose is to reduce tax? If I have a successful company in the US, and decide to allow branches to open in Australia, but require the Australian branch to pay me 65% of the profits, then the Australian branch would only have to pay taxes on 35% of the profits.

From my viewpoint, I'm running the Australian part of the business as kind of a franchise, or licensee business. Would this be considered as a transaction whose only purpose is to reduce tax? Who would get penalized if it is considered as such? The licensee in Australia? Or me in the US?

Shari