There’s an epic tax battle of State of Origin proportions going on in Sydney this afternoon at a Senate inquiry into the tax paid by multinational companies and the heavyweights of the digital age – Google, Microsoft and Apple – fronted up to be grilled by politicians.
Maile Cargnie, Google Australia’s MD was there, along with Apple Australia’s MD, Tony King.
Microsoft Australia was taking no chances. It sent its corporate vice president of worldwide tax, Bill Sample, to address the inquiry, from the US corporate HQ. He arrived on Easter Sunday.
Sample told senators he came out because he was the best person to answers company questions on tax.
He revealed that Microsoft generates around $2 billion in software product and services revenue in Australia, which is booked in Singapore. This includes things like online subscriptions – one senator says he pays $12 a month – the XBox and even the physical Microsoft CD you’d buy at JB Hifi.
Another $100 million of consulting services revenue is booked in Australia.
Sample said that Microsoft Australia is not related in a legal structure with Microsoft Singapore or Microsoft Ireland.
Business Insider has previously explained the complex nature of the software company’s corporate structure and who owns what here.
However, the Australian arm is owned by the company’s European holdings business, which in turn is owned by the US corporate parent.
It’s this complex company structure and the ability of multinational company to book revenue from one country in another that the Senate inquiry is grappling with as it tries to put more corporate tax revenue in treasury coffers.
There were a range of revelations from the corporate bosses in around two hours of questioning, including the fact that several of Australia’s leading tech companies are currently being audited by the ATO. More on that here.
While it was a fairly torrid exchange between the politicians and the tech bosses, the surprising thing was that Apple and Google knew a lot less about how the revenue and tax situations worked in their companies and had to take some of the questions on notice. After telling the inquiry that Google Australia used an auditor annually to determine how much it would bill the Singapore parent for the work done here, she was unable to name who the auditor was.
However, there was a lighter moment when the chair of the inquiry, Labor senator Sam Dastyari, said he would probably need the trio come back and provide further evidence at a later date.
Acknowledging that Sample would be back in America, Dastyari said “maybe we can Facetime you”.
“That’s not a Microsoft product,” someone interjected.
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