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In Australia, Google Pays Just $74k Tax On Claimed Revenues of $200 Million
daria42 writes "Looks like Apple isn't the only company with interesting offshore taxation practices. The financial statements for Google's Australian subsidiary show the company told the Australian Government it made just $200 million in revenue in 2011 in Australia, despite local industry estimating it actually brought in closer to $1 billion. The rest was funnelled through Google's Irish subsidiary and not disclosed in Australia. Consequently the company only disclosed taxation costs in Australia of $74,000. Not bad work if you can get it — which Google apparently can."
This is just part of the campaign to tar Google with any brush they can. Read this.
Help stamp out iliturcy.
Businesses don't pay taxes, their customers do. I cheer whenever I hear about someone dodging taxes, although I'd cheer more if the size of your accounting team didn't determine your tax bill.
Why don't people ask for laws simple enough to just -know-?
How does that work out then, Australia has 1/300th of the worlds population, yet the revenue is 1/40th of Googles revenue???
Methinks someone is mud slinging to deflect attention away from the Microsoft tax fraud (I'm calling it fraud because its a hollow front company in Reno pretending to be a substantial part of Microsoft's business), and I'm point to Microsoft because submitter listed 'Apple' but not Microsoft. Which are the two instances we've had already, so it sounds like he wants to shift focus away from something.
Corporation tax is charged against profit, not revenue.
A successful, well-run company can easily have a profit of $1 on revenues of billions and therefore pay only 25 cents tax.
If a company is making millions and billions in revenue it usually indicates that they are ( 1 ) not paying realistic dividends to holders of preference chares and ( 2 ) they are not investing internally in R&D. Both those are booked against the profit & loss account.
"Taxes are the price we pay for civilization."
-- Oliver Wendell Holmes, Jr.
Your characterizing their actions without any basis. They appropriately pay taxes in Ireland for the services they render there. If there is something illicit going on you should describe exactly what it is, but I suspect if you actually read the tax code of both countries and compared it to what they were doing you would see the logic behind not having double taxation.
And unfortunately, I am one of them. I have to pay almost half of what I make to various governmental overlords, which it says so by law. But if I'd really want to make money, I shouldn't work harder or get smarter, I just need to steal from the government.
there is no issue with my network
What kind of fool of a company would Google be if it DIDN'T exploit every tool the government gives it to minimize it's tax burden? Furthermore, how irresponsible to it's share holders if it didn't utilize the law to achieve the highest rate of return.
Google is not the villain here. No company is, when it's simply exercising the controls given to it by the government under which it operates.
Mod me down with all of your hatred and your journey towards the dark side will be complete!
They are calling it a translation error and that in fact the company motto is "Do Evil". Apparently "Don't" doesn't translate well from corporate BS to plain speak.
It goes by many names. Tax avoision, tax optimisation, tax efficiency. Google does it, Microsoft does it, Apple does it... even the optician I use has a token headquarters in the tax haven of Gurnsey. Every major company engages in the practice, and they'd be stupid not to. Making a profit is the reason for their existance.
Google creates many jobs in Australia, and not only do those Australians pay taxes, they don't depend on welfare.
not just for Hollywood anymore.
Don't fight for your country, if your country does not fight for you.
Slashdot - News for Accountants, Taxation that matters
not just large corporations.
Not that it has the same value.
And yes, it should be stop. Monies leaving the country should have the crap taxed out of it.
The Kruger Dunning explains most post on
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you cant blame any company for taking advantage of the current situation
but it doesnt matter who it is when i see the huge earners any region of the world paying less tax then the dude working at mcdonalds....
man does it ever grind my gear, i mean who the FUCK like that happen, what ever politician or group of them that allows that shit to get pushed through in the first place should be shot, period.
Id love to see a major change in the tax code applied retro actively! lol
as an aside, i did some quick calculations on the tax apple didnt pay(not to bash apple i just already did the math, although i do hate apple) but it works out to like 500,000 people making 40k a year could not have been tax instead of apple being taxed at 10%or 750,000 could have been taxed at 10% if apple was taxed at 35%
Its just crazy, say there is few a dozen companys doing that in america or that some of them make less then 40k a year and 10% of the countries population could be paying 10% tax and that everyone numbers not just working class. its mind boggling how frustrating it is.
Fuck governments. They don't deserve shit from any of us.
Google provides jobs for many Australians, who pay taxes, with the added benefit of keeping them off the welfare rolls.
Is that not enough?
As an Australian citizen, let me just say this:
Fuck me dead!
The Australian government institutionalised tax-breaks to multi-nationals in 1947, so don't blame those companies. Blame the Australian parliament for lying to its citizens.
In 2004, the tax-office (ATO) released its 10-year summary. One reporter mentioned that multi-nationals paid approximately 2% tax. The next day, sitting politicians were demanding a federal inquiry. On the third day ... silence. The issue of lost revenue had disappeared overnight.
It shows how beholden the media companies are to the Liberal party. Now the Labor party has power, politician-bashing is the order of the day.
Actually I'd say that here the problem is more to do with lawyers than politicians. Even if you had good politicians lawyers are getting so good at finding and exploiting loop holes that you would be in a constant cycle of patch followed by crack as lawyers attempt to "jailbreak" a company's profits into low tax countries.
Companies don't pay taxes! Their customers pay taxes that are integrated into the price of the good or service.
Companies should never be taxed. Companies should create jobs and pay dividends.
When everybody has finished foaming at the mouth: TFA is total nonsense. You don't get taxed on revenue, you get taxed on profit. Without knowing what the associated costs were, you can't know how reasonable the tax figure is.
Maybe we should all say that copyright laws only apply if you pay taxes in that country? That will make them think twice about going to tax havens with no legal system that will endorse their claims of piracy, trademark or copyright violation.
I was promised a flying car. Where is my flying car?
Actually, dividends are booked against retained earnings which is what you have left after showing a profit and paying taxes on it.
Looks like Burson-Marsteller successful infiltration of Slashdot is producing fruit. They have been hard at work on Slashdot lately. With all these attempts to smear google lately seems like their clients Microsoft, Facebook has been pushing them for results.
I think people here don't seem to understand the Australian tax system.
It is entirely designed to take money from productive individuals and hand it over to corporates, while cutting in the politicians who facilitate this. Then the government proceeds to hand over a few crumbs to the unwashed masses (a.k.a. taxpayers) from the sell-off of natural resources, while avoiding at all cost to invest anything in infrastructure.
In such context, Google's contribution of $74,000 (which is less than half of the income taxes I pay as an individual Australian resident per year at the marginal rate of 48% for my income from hard work and lots of overtime) can be seen as a generous token, because most corporations seem to pay bugger all and just pocket obscene subsidies instead.
If I had mod points, I'd mod this up. I reckon you're close to the mark.
There have been so many tax subsidies/loopholes for large multinationals, even when the Aussie dollar was ridiculously low, not that long ago.
Yet the tax rate for individuals is ridiculously high. The majority of the population are paying the bills (and the government's doing a great job of literally *giving* away our tax dollars), while other industries (I'm looking at you, mining industry) make massive record profits off our (finite) natural resources. It has to change.
Corporation tax is charged against profit, not revenue.
Yes.
A successful, well-run company can easily have a profit of $1 on revenues of billions and therefore pay only 25 cents tax.
Not without a LOT of financial shenanigans - which would have the auditors and the IRS in a tizzy. Also, for a public company, the stock price would be in the shitter which would mean the executives couldn't make their millions.
If a company is making millions and billions in revenue it usually indicates that they are ( 1 ) not paying realistic dividends to holders of preference chares and ( 2 ) they are not investing internally in R&D. Both those are booked against the profit & loss account.
I think you meant profits not revenues.
Dividends are not booked as profit or loss. Dividends are distributions of after tax earnings and therefore have no bearing on taxes. Any dividends a company doesn't pay becomes part of retained earnings which adds to the stockholder's equity.
And as far as #2, tell that to Apple and the pharmaceutical industry. There's only so much R&D you can do before it negatively impacts the firm.
Since when does being no fool imply being no villain? Aren't the greatest villains dangerous because they *aren't* fools?
What if the taxation loopholes are mistakes and unintended imperfections in the laws? Then a company exploiting those loopholes isn't simply exercising rights given by the government, but defrauding the government via technicalities.
What if, however it comes about, the intention that companies pay a reasonable fraction of their earnings in tax is compared with the reality that some companies pay a negligible fraction only? Then the obvious conclusion that something evil and condemnable is going on applies.
Google should release a statement saying, "We want to thank the authors of this article for highlighting the stellar work we've been doing to minimize our tax bill. Of course, most companies minimize their taxes as far as possible for the purpose of increasing shareholder profits. But here at Google we also do it because it's just the right thing to do. If you want to help people, or make the world a better place, do you write a check to your government? Yeah, we don't that either. We'd rather spend it building software for you to use, or perhaps to grow our business for the enrichment of our shareholders, who can then use those profits to pursue their own goals. If you're afraid of being left out, you should really consider owning our stock."
I guess when your tax guy "finds" an extra $2000 in the form of a tax refund, it's totally awesome, and completely "legal', I'm sure...after all, everyone has goldfish expenses, right?.
But when large corporations do the exact same thing, we're....shocked and appalled?
Wake up already.
because there are no dividend to spend in Australia.
Corporation tax is charged against profit, not revenue.
A successful, well-run company can easily have a profit of $1 on revenues of billions and therefore pay only 25 cents tax.
If a company is making millions and billions in revenue it usually indicates that they are ( 1 ) not paying realistic dividends to holders of preference chares and ( 2 ) they are not investing internally in R&D. Both those are booked against the profit & loss account.
Revenue is vanity, profit is sanity.
A company that makes only $1 per year is either a shell (being used expressly as a tax dodge) or incredibly poorly run, in the former case of the Taxation Office should rip them a new one, in latter case the shareholders will rip the C-level execs and the board a new one.
Calling someone a "hater" only means you can not rationally rebut their argument.
Corporation tax is charged against profit, not revenue.
You are correct but the American (and some international) press frequently uses the word "revenue" when they mean "profit". This probably isn't helped by some opposing accounting standards confusing the use of the word "income", by which some mean revenue and others mean net income i.e. profit.
Your final paragraph is wrong. I'm not sure whether you've contradicted your first paragraph by mixing up revenue and profit. Anyway, not all companies have preference shares, and those that do they tend to be more like loans that are convertible into ordinary (real/normal) shares based on some criteria. Common tool for private equity firms to provide flexibility in their exit strategy. Preference share "dividends" might be treated as dividends i,e. a distribution of profit if they are structured to be like shares, or may be charged to profit and loss as an interest cost if they are structured to be more like loans.
R&D, again not every company needs to invest in R&D. Furthermore the accounting standards are a bit difficult/detailed in this area so some R&D can be capitalised onto the balance sheet as an asset while some is immediately written off to the profit and loss as an expense. It's quite common for a company to be making millions and billions in profits precisely because they do invest in R&D.
This is a technique that was perfected over many decades which is commonly known as "Hollywood accounting." http://www.creativemovieaccounting.com/hollywood-accounting.html
It's been losing more and more when challenged in court by private individuals, but the IRS doesn't dare try to attack these "job creators".
A novel legal theory that would allow a prosecutor outside the IRS to attack these sham construct companies would be to allege that when the US corporations pay higher rates for a service to a subsidiary in one of these tax havens than they would pay elsewhere for that service then the excess payment is a "bribe" and, therefore, is an action in violation of the Foreign Corrupt Practices Act.
Not only does that take prosecutorial discretion out of the IRS's hands, it also massively ups the potential damages that can be assessed against both the corporations and personally against the directors who approved those over-payments.
Start talking personal jail time instead of just corporate fines and this would happen a LOT less often.
It's an illusion to believe you pay more taxes because corporations pay less.
Having corporations pay more taxes would only mean they would raise their prices. Taxing corporations means taxing everybody.
Let all corporations be tax free and charge income tax on shareholders and high-salary managers instead. That would be a much more just system.
This isn't even specific to tech companies. Any large company which makes significant revenues is going to see how they can reduce their tax bill. It would be against their fiduciary duty to stock-holders for them not to. They won't break the law to do it normally, so all you have to do to prevent it is to close the loop-holes. Of course the preferable thing would be to simplify all of the related laws so there wouldn't be so many loopholes in the first place.
I think people here don't seem to understand the Australian tax system.
As an accountant, it's clear to me that people generally, but especially technology websites, do not understand any tax system. In the case of the latter I'm fairly sure it's wilful ignorance since there's a habit of neatly avoiding very obvious things that require mere common-sense to trigger realisation that they're spouting bullshit.
It's equivalent to those media articles on hacking, with the picture of some hooded terrorist stealingz your megahurtz. There is activity to be concerned about, but anyone with the slightest bit of knowledge -- or simply combining common-sense and critical thought -- can just glance at it and find themselves shaking their head as they hold it in their hands, unable and frankly unwilling to decide on which is worse: that the media is so intentionally misleading or genuinely so incompetent.
That's bullshit. Reductio ad absurdum means taking a statement to its extreme implications (as your link says), but it does not mean taking a statement and distorting it to say something that it didn't imply.
The AACS key is NOT 0xF606EEFD628B1CA427BEA93A9CA9773F
Businesses don't pay taxes, they just pass them on to the consumer in the form of higher prices. Corporate taxes are just a backdoor consumption tax.
This is complete bollocks. An aggressively growing company should have as close to $0 in profit as possible, so as to grow the business and share value.
It is only once a company is old and mature (and slow growing) that one expects higher dividends and less expansion.
No sane investor expects an agile rapidly growing company to stop growing and realize large profits, that is sheer stupidity.
Revenue is not the same thing as profit.
As an accountant, it's the way it is, it's my job that i've spent years working on and studying so it's quite logical to me. It's my bread and butter, figuring out economically unstable peoples taxes for a fee.
I have this issue with a co-director of mine who got into business through accounting and finance, because of the complexities and convoluted nature of taxes have kept him in very secure employment he sees nothing wrong with the massive financial burden and stress placed upon regular people relatively to corporations. Not because it's fair or reasonable, but because he's spent his professional life involved in it, it's simple and obvious. To the rest of us who don't have degrees in accounting, we actually have the other work this world requires done and little time to do it and are far from qualified to even comprehend tax laws.
I have however found that it is far easier to arrange your taxes in a more economically pleasing manner as a business rather than an individual. Which is great for me, not so great for my employees.
"Corporation tax is charged against profit, not revenue."
And if you deflate your revenue (say from $1 billion to $200 million) then you deflate your profit as well. The point of the article is that if they reported a higher and more accurate revenue then they would have paid a higher tax and that such practices are the norm amongst companies to avoid their fair share of the tax burden.
at least they paid there 567 employees 130 million(250,000 each)
First you started out by claiming this submission is part of a conspiracy, and now you're obsessively responding to every post, defending Google's behavior to your last breath. I always see people getting accused of being Apple and Microsoft shills, but nobody ever calls out the Google shills.
You are a Google shill, sir.
guess this fell be the wayside rather quickly
Now our government has an extra $74,000 with which to fuck us.
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You buy stuff on ebay to avoid taxes.
... so it seems that taxes has some issues
Google deals in more money so it sounds more in absolute numbers.
Simply put the government has to figure out a way to sells protection (taxes) to a company for its services to a society.
Its like patents, but that is broken
Corporations don't pay taxes; PEOPLE pay taxes.
As an Aussie paying more than $74k tax, I earn nowhere near 200 million. What kind of magic is this tax-dodge they possess?!
Impose tax on idle cash.
Casteism
The debate isn't around understanding a tax system or not. The question is the following: "Is the tax system fair when a corporation can pay as little as $74000 tax on local sales of $1,000,000,000?"
You highlight my point. Tax is charged on profit, not sales.
The same applies to you. You might not notice it since employers generally pay all an employee's business expenses. However if you were required to (say) purchase a laptop for work use out of your own funds, that'd be a tax deduction.