In Australia, Google Pays Just $74k Tax On Claimed Revenues of $200 Million

Taxes suck. by symbolset · 2012-05-04 17:18 · Score: 4, Interesting

This is just part of the campaign to tar Google with any brush they can. Read this.

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Re:Taxes suck. by Kotakee · 2012-05-04 17:39 · Score: 5, Informative

Google was one of the first companies to appear on Slashdot on these shady tax practices. I find it pretty funny that Slashdotters don't remember it and now there's been several stories about Apple and Microsoft doing it.

Seriously, http://tech.slashdot.org/story/10/10/21/1627220/how-google-avoided-paying-60-billion-in-taxes . Back in 2010.

Google only pays a 2.4% tax rate using money-funneling techniques known as the 'Double Irish' and the 'Dutch Sandwich,' even though the US corporate income tax is 35%. By using Irish loopholes, money is transferred legally between subsidiaries and ends up in island sanctuaries that have no income tax, giving Google the lowest tax rate amongst its technology peers. Facebook is planning to use the same strategy.
Re:Taxes suck. by Anonymous Coward · 2012-05-04 17:57 · Score: 3, Insightful

You know, I'm a bit of a Google Fanboy. If there's a company I tend to forgive, it's Google, but let's dispel a few myths.
Taxes don't suck. In the US, you let people die in the streets if they don't have a healthcare card. in Australia, we don't. Taxes go to public hospitals, maintaining roads and other social infrastructure and services.
By Google not paying its fair share, like everyone else, they really are being dishonest - and I disrespect Google for that.
On the other hand, Facebook is far, far worse than Google.
Google, just pay your damn taxes like the rest of us. You're starting to develop a bad wrap. No evil?
AC
Re:Taxes suck. by symbolset · 2012-05-04 18:35 · Score: 4, Insightful

Google makes their money with local ads. It's not unreasonable to expect that they pay local tax rates for local ads in Taiwan bought by local Taiwan businesses and served from local Taiwan servers. That is entirely different from making your software in Redmond, WA, licensing it through a Nevada puppet corporation and then laundering the money through the double-Dutch or Blind Irish mechanisms of financial wizardry to make the profit happen offshore when that same software is sold from Khazakstan to Bangalore, and all the points between.

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Re:Taxes suck. by Kotakee · 2012-05-04 19:43 · Score: 5, Insightful

Just because they didn't break the law doesn't mean they didn't do wrong. There is a difference. For example all those Nigerian scams are actually legal because their law says you can cheat people who break laws. But would you really say that those Nigerian scams are objectively and morally right things to do? I don't think so. Likewise, Google has not done anything legally wrong. Their actions, however, are morally wrong.

And no, there is no easy solution to this. The ultimate reason why we need these are to allow companies in other countries to do business with companies in another. However, then we have jerks like Google who abuse this by setting up shell companies to take advantage of it and avoid taxes. Again, legally ok, but not morally.
Re:Taxes suck. by kraut · 2012-05-04 21:16 · Score: 4, Insightful

They broke Amazon.
They'll either break Google (10% tax on gross income) or force Google to make massive political contributions (aka blackmail) like they did for Microsoft.
For crying out loud: Companies pay taxes on profits, not revenues. If you read the article, "the company made a loss on paper of $3.9 million in that period. Both Google’s revenues and losses were up over calendar year 2010."
If you a company makes a loss, it doesn't pay taxes. Why should it?
Now, whether the accounting practices that lead to this loss are kosher or not, I don't know.

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Re:Taxes suck. by TFAFalcon · 2012-05-04 22:03 · Score: 4, Insightful

And that's part of the problem. Since they only pay taxes on profits, they can easily set up a subsidiary in country X (Ireland in this case), where the tax rate is close to zero. Then they have the subsidiary bill the parent company a few billion dollars for nonexistent services. And look, the company is suddenly not making any profit.
Re:Taxes suck. by mjwx · 2012-05-04 22:47 · Score: 3, Insightful

But even then, how is $74,000 tax on $200 million justifiable. Even after all the funneling.
Good accountants. The tax rate in Oz on my current salary is around the 20% mark, I pay around 18% of my total income due to deductions, it means reducing my taxable income by about $2-4,000 per year, I still earned and spent the money, but it's not taxed because of what I spent it on (phone bills, internet bills, trade publication subscriptions(yes, I deduct /. subscriptions) and more) A good accountant pays for himself in a better tax return..

But 0.37% tax is taking the piss when the corporate rate should be around 30% ish (educated guess, anyone got the real number, please let us know). I'm guessing they use a crap load of R&D concessions (the 20% time would be tax deductible here I think)

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Re:Taxes suck. by Eskarel · 2012-05-05 02:54 · Score: 4, Insightful

Yes, exactly, we should all run our countries like Ireland. They have no corporate taxes so they must be a bastion of innovation with a booming economy and full employment.
Oh wait, they have a bunch of shell offices for major corporations which pay no corporate tax and hire one person, they're broke, and they're economy is fucked, let's not.
It's funny how the neo cons all forgot the Irish. A few years ago they were the country to be idolized if you were a conservative, low corporate taxes, close to zero regulation, everything they believe creates a wonderful economy. Then it all fell in a pile because their unregulated banks, with the help of unregulated US banks, fucked them, and the corporations they didn't tax paid no tax but didn't open up offices to generate other benefits. Now if you talk to a neo con Ireland is just like the other PIGS and must have been a dirty socialist pit with profligate spending habits.

"Revenue" is a useless measure by Anonymous Coward · 2012-05-04 17:32 · Score: 5, Informative

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.

I beg to differ by happyhamster · 2012-05-04 17:43 · Score: 4, Insightful

"Taxes are the price we pay for civilization."

-- Oliver Wendell Holmes, Jr.

Re:I beg to differ by happyhamster · 2012-05-04 18:37 · Score: 4, Interesting

Wow, that's one way to ride your straw man [http://en.wikipedia.org/wiki/Straw_man] down a slippery slope [http://en.wikipedia.org/wiki/Slippery_slope]. Did I suggest anywhere 100% tax? Has there ever been a 100% tax?
As it happens, I am pretty familiar with the USSR economy. While the government did take a large chunk off one's wages, probably over 50% (maybe up to 70%, hard to give a specific number), the wages were way above "subsistence." People used their wages to buy expensive at that time electronics (TVs, video players), travel inside the country; frugal ones bought cars. For the 50-70% taxation, people were getting 100% free healthcare, 100% free kindergarten, high school, and college education and decent retirement benefits to name some.
About "taxing every worker to death, " that's just a lie. Minimum wage workers pay little to no taxes. Middle class pays more, but hardly over 30% even in extreme cases. Also, low wages people refuse to work for are not a result of taxation, but of employers intentionally pushing wages down because they can, due to high unemployment, offshoring, and cheap illegals.
And what the hell is this talk about “taxing to death" and "his dead body in the street"? It reminds me of ridiculous "death panels" by teabaggers. I have not seen unemployed dying on the streets yet. It seems that you are incapable of reasonable discussion about economy and taxes without resorting to threats of death and destruction to all who do not follow your anti-tax religion.
Re:I beg to differ by Maxo-Texas · 2012-05-04 19:18 · Score: 5, Informative

Actually, you are mistaken.
The total tax load on the lower income (minimum wage) is about 28%.
The total tax load on the middle income is about 42%.
The total tax load on the upper income is about 23%.
The total tax load on the top .5% is about 19%.
And the total tax load on the wealthiest (.1%) is about 17% and will be until taxes on dividends and income go up or we flat out tax wealth.
Homeless people are dead on average by 47.
Homeless women are dead on average by 43.
In first world countries.
They clean the bodies up quickly.
"Total tax load" is state and local taxes + excise taxes + property tax (which is in your rent too- just hidden). Really have to watch out for the republicans latest "pay no FEDERAL" taxes. Because it really ignores the total tax people pay by income.
There are about 50-70 Excise taxes depending on your state.
Electricity, water, cigarettes, booze, gasoline, car, bicycle, etc. etc.
And total taxes were above 90% on the wealthy in the 1950's.
The peak was 92% on income over $400,000 per year in 1952.
That was too far in one direction. But 17% is too far in the other direction.
The things Google and other companies are going makes me wonder why we allow them to stay in business. Just discorporate them or make their product illegal if they are not benefiting your society. It would be trivial for Australia to basically ban Google in Australia until they payed a fair tax on Australian income.

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Re:I beg to differ by geekoid · 2012-05-04 19:21 · Score: 4, Insightful

There is extremely little waste in the US government. fell free to go to the library and look at the accounting numbers. It's public inforamtion. INformation I used to get paid to sift through, and write code to sift through.
Talking about Taxes is stupid, and it distract from the real conversation. The republican have done a good job seperating taxes out of any value to the conversation.
Don't talk about taxes. Talk about services. In Oregon, I lot of people value parks, and forests. SO they have services to maintain and protect them. That costs money. It comes from taxes.
The misinformation and distraction campaign is why we now have people who want taxes cut, and services improved. The same people who get pissed off with police cuts back, the schools systems have layoffs are the same ones that refuse to vote for a tax or bond measure.
We want to pay less, and you gibe us more. As if the money for services comes from a different bucket.

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Re:I beg to differ by tftp · 2012-05-04 19:27 · Score: 3, Informative

And how'd all that free shit work out for them?
I can clarify that for everyone's education.
Free healthcare was available. However it never guaranteed a successful treatment. Only several hospitals in the country (those that serviced party bosses) were decently equipped with Western tools. The rest was dismal. Can you imagine going to the dentist and having your teeth drilled without local anesthetic and with a drill that did at best 1,000-1,500 rpm? With the power being delivered to the drill bit via a set of rollers and belts? You never saw such a torture tool in your life. But every dental place in USSR had them - and only them. Same applies, of course, to every other medical aspect. As people joked, "the healthcare is free only if you don't care about the results."
A kindergarten was free, maybe. However have you seen them? They were not exactly attractive or educational places. They were practical, though, because the State required every man and every woman to work, and not to sit at home tending to their children.
A common worker was not very likely to even live long enough to see the pensions. But those who did were not living like kings. The pension was only barely sufficient to keep them alive on the most basic food. In latest years of USSR the pension was enough to go to the grocery store... once.
Free education was probably the smartest thing USSR ever did. Mind you, it was not free to everyone. You had to take exams and to prove that you are smart enough to be admitted. Admissions were not infinite either. If you are in then you will be even paid a little stipend if you are doing good. The country needed engineers and scientists and doctors.
USSR fell because it was destined to fall, and now we know exactly why this is so. Most importantly, USSR never had any objective reasons to be stable. Most of the miracles were achieved on the wave of popular enthusiasm - after the Civil War, then during and after the World War II. The Baikal-Amur railway was the last example of that enthusiasm. That could not last; and once it was gone the society fell into the groove of passivity, indifference, cynicism and decay. This is not that dissimilar from the trends in the modern US society; however in USSR it was illegal to not work if you are able-bodied. In the USA it is just fine.
Re:I beg to differ by tftp · 2012-05-04 19:43 · Score: 3, Insightful

There is extremely little waste in the US government.
It is very difficult to debate this statement, largely because the statement itself defies belief. For example, are you saying that the whole TSA infrastructure, with their airport gropers and the VIPERs on buses, who steals travelers' belongings and can't see a gun on a passenger, is just fine and we should keep financing it?
Re:I beg to differ by roman_mir · 2012-05-04 20:49 · Score: 5, Interesting

I am pretty familiar with the USSR economy. While the government did take a large chunk off one's wages, probably over 50% (maybe up to 70%, hard to give a specific number), the wages were way above "subsistence." People used their wages to buy expensive at that time electronics (TVs, video players), travel inside the country; frugal ones bought cars. For the 50-70% taxation, people were getting 100% free healthcare, 100% free kindergarten, high school, and college education and decent retirement benefits to name some.
- OK, I was born and lived in USSR, let's take this apart, piece by piece.
1. Taxes. Taxes in the former USSR were built into the paycheck, however that was just a show. Every person was working for the gov't, thus nobody had to file any tax returns, because that made no sense, why would you have to do that, legally you basically couldn't have any income other than what the gov't paid you.
Of-course you could in principle do something underground - even simplest of things, like make your own soap and sell it, grow some food and sell it, rent out a room in your apartment.
But, first of all, the apartments were given out by the State, not acquired in any free market, there was a huge shortage of housing, multiple generations of people lived in one apartment, old, pre-war apartments were shared by multiple families, a family of 3, 4 people could live in one room, sharing a kitchen and a bathroom and the hall with a few more families.
People waited for new housing their entire lives. Obviously situations were different, the more enterprising people were in the Communist Party, running the place, so they certainly had ability to get paid much more, specifically they could steal things and get bribes from all over the place, and they did. They got apartments, housing without long line ups, they even got more than that - 'dacha', which is a country house, where one would go on a weekend or for holidays.
But the point is there was huge shortage of living accommodations, my parents waited for 17 years for an apartment in Ukraine. 17 freaking years in a line up.
2. Cars.
Well, if you can call those ridiculous metal boxes cars, but even those couldn't be acquired by anybody living on a 'normal engineer salary' of 120 rubles. A car would cost 5-7000, depends on a car, depends on time it would differ, but basically it would take one person about 10 years of unspent salary to buy a car, in reality nobody could buy a car for that money.
Cars were bought on the black market, for twice, tree times their nominal prices, people bought (or stole) parts over long period of time and put together the cars themselves.
You see, when everybody gets the same salary (about 60 rubles for a cleaner, to the average and most common salary of 120 rubles paid to engineers, doctors, teachers, I am talking post-Krustchev, before Brezhnev, when normal salaries were about 3000 'old' rubles for a factory worker), an experienced factory worker could be making 200-350 rubles, a high ranking manager would be around 200-500.
A politician, a party member wasn't working for money. REAL USSR economy was not built with money, it was built with connections, with personal relationships. That's what happens when money is fake, and money was fake, trillions of rubles were printed and put into circulation year after year.
Farmers could have some extra money, because they would grow their own crops and sell them at markets, the cops would take bribes, protection racket, not to throw a book at those semi-legal activities.
People stole from everywhere they could, from factory floors, to collective farms, to construction. The army was a pretty good place to steal from, or maybe just use the conscripts for personal purposes - built a bigger 'dacha' (country house) for the generals or politicians or managers, what else is new.
Taxes in USSR were completely irrelevant, because money was fake and people were quite poor.
The poor quality of pro

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Re:I beg to differ by swalve · 2012-05-05 01:59 · Score: 3, Insightful

Different definitions of waste. You are saying they shouldn't be spending that money, and are therefore wasting it. What the GP is saying is that for what they decide to pay for, they get their money's worth. And I think that is mostly true.

Google isn't the villain here by grasshoppa · 2012-05-04 17:58 · Score: 5, Insightful

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.

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Re:Google isn't the villain here by Andtalath · 2012-05-04 19:18 · Score: 3, Insightful

No, it follows that there are very few rules for internationeal taxing which actually work.
Re:Google isn't the villain here by Ralish · 2012-05-04 20:49 · Score: 3, Interesting

Let me re-phrase on your behalf:
"What kind of company wouldn't exploit every loophole or legal avenue available to pay the absolute minimum amount of taxes in the country they do business in and reap the benefits of? Hey, provided it's not actually illegal, who cares if it's wholly unethical?"
At some level, it's a frankly depressing picture of humanity that we can so easily rationalise away doing pretty much anything in the name of material pursuit, so long as it doesn't outright violate national laws. What's worse, is that I hate the fact that governments are seemingly enacting ever more legislation, ever more restricting our rights, and yet, it seems that when it comes to things like tax law, the reason is because if they don't, people will abuse it unless it is absolutely watertight. Hell, people admit they are looking for and exploiting the system as if it's a badge of honour, as if they'd be somehow morally liable if they didn't abuse the system.

Minor correction in from Google by Grayhand · 2012-05-04 18:05 · Score: 4, Funny

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.

Don't single out Google on this. by SuricouRaven · 2012-05-04 18:19 · Score: 4, Insightful

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.

Re:Don't single out Google on this. by AHuxley · 2012-05-04 18:50 · Score: 3, Insightful

One by one they are been named and listed. http://www.theage.com.au/business/ikea-australia-pays-tax-like-a-charity-case-living-at-the-margin-of-society-20110331-1cnd7.html

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misunderstandings about the Australian tax system by hherb · 2012-05-04 20:08 · Score: 5, Insightful

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.

Re:misunderstandings about the Australian tax syst by DaveGod · 2012-05-05 00:17 · Score: 4, Interesting

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.

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In Australia, Google Pays Just $74k Tax On Claimed Revenues of $200 Million

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