Government hits out at tech giants over tax, but industry warns issue not so simple

The Federal Government has continued to slam Apple and Google over claims the tech giants avoid tax, but the industry has warned that fixing the issue will take longer than people may think.

Federal Assistant Treasurer David Bradbury accused international companies such as the two giant tech businesses of exploiting tax laws in countries like Ireland, allowing them to minimise taxes in Australia as a result.

Various media reports over the past few weeks have accused the two companies of these practices, leading to what Bradbury calls the “double Irish Dutch sandwich”.

This refers to businesses shifting income between Ireland and the Netherlands.

According to The Australian Financial Review, Bradbury said at a tax conference in Sydney that if these businesses aren’t paying enough tax, “that’s not fair game”. He cited a report that suggested Google only paid $74,000 in tax, although the tech giant itself said that figure was $781,000.

“Even if the higher figure is correct, I can understand why many in the community would be perplexed to learn that this figure is so low for a company whose annual advertising revenue from Australia has been estimated by media analysts to be over $1 billion per annum,” he said.

Both Apple and Google were contacted by SmartCompany this morning, but no reply was available before publication.

Bradbury made the comments yesterday as the Treasury released new draft legislation for changes to transfer pricing rules, designed to help domestic tax law better align with international standards.

Tax Institute senior counsel Robert Jeremenko told SmartCompany this cooperation between countries on tax law is the problem – Google and Apple may not necessarily be doing anything wrong.

“This isn’t just in the tech sector, either. It’s a global structural issue. And any solution is not going to happen quickly.”

Apple has particularly been targeted for keeping most of its $US100 billion in cash offshore, but as Jeremenko points out, treaties between different countries and various legislative agreements create a complicated web of laws through which companies can reduce their burden.

“The issues raised here are a very complex area. The issue is made even more complicated by the fact you’re not necessarily selling widgets, but internet services and so on.”

“It’s much broader than domestic tax policy, and there’s not going to be any quick fix.”