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."

Comments

Taxes suck.

[symbolset]

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

Re:Taxes suck.

[Kotakee]

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.

[symbolset]

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.

Re:Taxes suck.

[Kotakee]

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.

[kraut]

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.

Re:Taxes suck.

[TFAFalcon]

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.

[Eskarel]

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

[Anonymous Coward]

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

[happyhamster]

"Taxes are the price we pay for civilization."

    -- Oliver Wendell Holmes, Jr.

Re:I beg to differ

[happyhamster]

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

[Maxo-Texas]

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.

Re:I beg to differ

[geekoid]

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.

Re:I beg to differ

[roman_mir]

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

Google isn't the villain here

[grasshoppa]

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.

Minor correction in from Google

[Grayhand]

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.

[SuricouRaven]

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.

misunderstandings about the Australian tax system

[hherb]

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

[DaveGod]

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.