The Australian senate is on the warpath over corporate tax avoidance and multinational companies shifting revenue to nations where the tax regime is more favourable.
On Wednesday afternoon, the top brass from the Australian outposts of Google and Apple – Microsoft sent its global head honcho of tax all the way from the USA to appear – fronted a senate inquiry into corporate tax avoidance.
A lot of the revenue generated in Australia is sent offshore, to countries such as Singapore
Google Australia MD Maile Carnegie defended her company’s corporate set up saying it paid 19.3% tax on profits last year and doesn’t “structure itself based on tax, it structures itself based on being competitive”.
“We are not opposed to paying tax. What we’re opposed to is being uncompetitive. And just like Australia needs to compete with Singapore or Ireland or the US or the UK for various things, we need to compete with the people sitting at this table as well as Tencent in China, as well as Alibaba, who is now incorporated in the US,” she said.
But then the senators, led by Labor’s Sam Dastyari, the inquiry’s chairman, played the vibe card, challenging her on the morality of what corporations should pay as its fair share of tax.
Carnegie, whose company has the motto “Don’t be evil”, sent the vibe straight back to Canberra with a killer point that shows how fraught the issue is for politicians around the world, saying:
“When I think about morality I don’t think about it in terms of geographic boundaries.
“I also think it’s a very qualitative statement. If I asked each one of you what is the appropriate and morally right tax to be paying, I would probably get as many different answers as there are [senators] sitting up on the table.
“Also when you look at it internationally, the answer to that ranges from people like the UK, who says that it’s 20%, through to Ireland who says it’s 12.5%, through to South Korea that says it’s 24%, through to Singapore that says it’s 17%.”
Dastyari interjected, saying “Bermuda, zero.”
“Through to Bermuda, that says it’s zero. So I don’t know what the right answer is.”
Google Australia’s boss pointed out that the five year average for global corporate tax paid by the company is 20%, also admitting that 13 years ago, in 2002, in 2002, it was 48%, which suggests that multinational corporations have been faster and smarter than governments at adapting to the global tax landscape.
“We are not opposed to paying tax, what we are opposed to being uncompetitive, because as I said, we have competition sitting at this table and all around the world. And when I think about the morality of it, I think the people who need to answer ‘what is that right number?’, quite frankly, are the people sitting on your side of the room, and what we need to do is make sure we’re living up to that.”
The senate inquiry continues with Australia’s multinational mining giants also fronting up for a grilling this week.
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