Australian Govt Pledges Action On Google Tax Evasion

daria42 writes "Looks like Google's habit of funneling billions of dollars in revenue through its Irish and Bermuda subsidiaries continues to attract unfavorable government attention globally. France has already announced plans to take on the search giant's tax evasion habits, and the Australian Government, to which Google paid just $74,000 in tax last year despite having Australian revenues close to $1 billion, has now confirmed plans to do the same."

Comments

Avoidance vs Evasion

[HungryHobo]

have they actually been charged with tax evasion?

TFA doesn't mention evasion(not paying the tax you owe and illegal) and it's very different to avoidance which is just using legal means to pay as little tax as you legally can.

Re:Avoidance vs Evasion

[ccguy]

The day there's an unified tax law over Europe some non-European company will step up to replace Ireland.

That's fine. But there will be import taxes and duties, same as with anything that comes from say, China.

The problem here is that Ireland is distorting tax income in other European Union countries and these countries can't do anything about it.

Say you pay now a 30% income tax. I -legally- offer you to pay just 10% over here (but you still live wherever you are, and use the infrastructures and services over there). Do you take the offer or not? If you do, then you pay 1/3 of the taxes you should pay, you still get all the benefits (at someone else's expense), and I get 1/3 of your taxes for nothing.

That's what Ireland is doing.

It isn't very different

[Kupfernigk]

Actually, you are wrong. Companies freely admit that they sail as close to the legal wind as possible. Whether they are over the line or not depends on a case coming to court. Avoidance is merely evasion that has not yet been shown to be illegal.

Re:It isn't very different

[HungryHobo]

lots of forms of tax avoidance have gone to court and been declared perfectly legal. so no, it's not a matter of "Yet"

If you do your own taxes then whenever you do anything legal to keep your tax bill down then you're avoiding taxes.
Ever put your money into a government saving scheme to which DIRT isn't applied? tax avoidance.

and sometimes the lawyers are wrong, they've missed a comma in the law or the judge decides that some interpretation of the law isn't correct.

Re:It isn't very different

[Anonymous Coward]

Understand that "tax avoidance" is merely a loaded term targeted at uneducated public for "tax compliance". Google in this instance is being used as a scapegoat for it's "tax compliance" in order to deflect anger about unneccessary and inefficient "stimulus" schemes that have left the country in fiscal deficit.

Re:It isn't very different

[Xest]

It doesn't matter either way. Here in the UK for example the government has a corporate tax rate of something like 21%, yet Amazon paid no corporation tax on £7bn worth of sales.

It doesn't matter how they managed to do it, the point is the intention is clearly that they pay 21% of that in tax so the government has every right to collect that from them retroactively even if it means they technically did nothing wrong at the time.

As Ian Hislop put it on have I got news for you a few weeks ago he was spot on, stating something along the lines of:

"Okay yes, very funny, you're very clever, you found a loophole, now just pay us what you owe" ...and that's the attitude governments are now taking over this, quite rightly too. Nice to see Australia following France's lead, hopefully the UK and others will also join in now where this has come to light. You can't justify a situation where small businesses and most citizens pay the taxes it's intended that they pay and larger companies and individuals with more money don't because they have enough money to pay people to find loopholes.

People and companies can disagree with taxes and that's fine, but if you think they're extortionate then get them changed through political means, don't evade them and leave everyone else to foot the bill and subsidise your existence because you're too selfish to contribute your fair share to society.

Yes, yes, I know these tax dodger companies claim they still produce tax in other ways, like VAT paid, employees taxes and so forth, but they're still subsidised. The amount they pay isn't enough to cover healthcare to keep their workers healthy enough to work, the education system the rest of us paid for to give them an educated workforce to even make money in the first place, the highways they use to transport their products, the police, military, and fire brigade to protect their premises and so forth. That's why corporation tax is there in the first place - to help pay for this sort of thing. If they don't pay it perhaps the alternative is to remove services like police protection from them or something and let people steal from them at will making it a fair playing field.

Re:It isn't very different

[HungryHobo]

You still don't seem to understand the difference between "evade" and "avoid"

so, the government starts a saving scheme to encourage people to save.

they offer to not charge you tax on the interest on money you save. the rate is a little worse than other saving accounts but you go with that one since without the tax you make a little more interest.

then a few years later some self righteous clown comes along and says to you "very funny, you're very clever, you found a loophole, now just pay us what you owe" and gives you a bill for 5 years back taxes on the account along with interest and penalties as if they'd never offered the origional deal.

is that remotely fair?

or the government wants to encourage the building of low income housing. so they offer to only charge a lower rate of tax or no tax. you invest your money into building low income houses.

then a few years later some self righteous clown comes along and says to you "very funny, you're very clever, you found a loophole, now just pay us what you owe" and gives you a bill for 5 years back taxes on the account along with interest and penalties as if they'd never offered the origional deal.

is that remotely fair?

You're morally obliged to pay every penny of tax you owe but not a penny more.

you don't want rule of law, you want an autocracy where even if you follow the law to the letter someone can swoop in and punish you or declare that you owe them money.

Re:It isn't very different

[Xest]

"You still don't seem to understand the difference between "evade" and "avoid""

No, I fully understand it, I just also recognise it's being used as a poor excuse for avoiding intended taxes.

"is that remotely fair?"

No because that's not what we're talking about here is it? The example you cited is one where the government intended something be tax free, in the cases we're talking about the exact opposite is true - the government in the UK for example never intended that Amazon avoid paying the 21% corporation tax on their $7bn in revenue, quite the opposite.

"You're morally obliged to pay every penny of tax you owe but not a penny more."

For some value of owe. To most decent people owed tax means tax that the spirit of the law intended you to pay, not "the bare minimum tax you can legally get away with paying by using complex methods of cheating the system, and outright lying about losses".

"you don't want rule of law, you want an autocracy where even if you follow the law to the letter someone can swoop in and punish you or declare that you owe them money."

I want companies to follow both the letter AND the spirit of the law. You only think people should have to follow the letter of the law, that's the difference. When the government sets a rate of 21% corporation tax, it's pretty clear that the government intends that companies pay 21% corporation tax on their revenues. There's nothing arbitrary or autocratic about enforcing that even if some companies and individuals feel they should be able to dodge it by trying to exploit loopholes in other laws.

Look, as the public accounts committee in the UK pointed out the other day - companies like Amazon on one hand are dodging taxes by creating fabricated losses and telling the government they made a loss in the UK so owe no tax, and on the other telling investors they've made record profits in the UK. This is called lying.

Yes in some cases you can argue they've found a legal loophole that means what they've technically done isn't illegal, but then, as I pointed out, it's not illegal for the UK government to withdraw public service support such as police and fire protection from companies like Amazon. As a sovereign nation the UK has every right to do that, just as they can enact laws to retroactively collect these taxes.

The best you can argue is that these companies did nothing illegal at the time. It doesn't change the fact that the taxes are both owed, and can be legally and legitimately collected by the authorities even if that means retroactive enforcement.

Re:It isn't very different

[drinkypoo]

Where there is an flaw in tax law, it will eventually be written out and that loophole closed

I can't speak for Australia, but here in the USA, corporate interests bought those laws, and therefore the features that permit them to dodge taxes are not flaws, they are the system working as designed. Therefore, they will not "eventually" be written out in order to close the loopholes, because the people writing the laws are keeping them open. Even if you should close a loophole, not only will another be opened, but the same one will be reopened later.

Every multinational company will have similar tax plans in place (or their accountants atrn't doing their jobs properly) and they will all be concerned about any tax developments.

I'm sure their lawyers are rubbing their "hands" (or pedipalps or whatever you call lawyers' forelimbs, I haven't kept up with analzoology) together with glee even as we type.

Revision of tax law is not the work of a moment...

No, it takes decades to really and truly corrupt a body of law.

I really don't know what things are like in Australia but since they learned most of what they know from the same teacher we did, only earlier, I imagine that law is pretty well and rightly fucked there as well.

Re:It isn't very different

[Attila Dimedici]

You are apparently unaware that most versions of the Flat Tax propose that there be a single deduction for each taxpayer that would be set at some level based on the Poverty Line. So, one could calculate how much it costs to provide the "necessities" and set the deductions some amount above that, thus making it so that people do not pay taxes on necessities. This would be a fair tax and would in all probability result in the wealthy paying more than they do now, since there would be no additional deductions for them to use to reduce their taxable income so that they do not actually owe that high marginal tax rate that everyone is so anxious to see passed.

Re:It isn't very different

[thrillseeker]

in favor of a fair tax. And that is a simple progressive tax

There is nothing fair about a progressive tax except in the eyes of those who pay less than others.

Re:Avoidance != Evasion

[clickclickdrone]

Good on any company for minimizing their tax liability.

Even if that tax is used to provide healthcare, schools, roads and benefits for those on low wages or unable to work? Or does that crazy idea make me a commie?

Re:Avoidance != Evasion

[clickclickdrone]

So you avoided taxes.

Yep, from 40% to about 35%. Not quite the same as reducing it to 0.0007% is it? it's the sheer scale that people object to. Is that so hard to understand?

Re:Tax incidence

[clickclickdrone]

Google will have paid plenty of tax on its employees salaries,

Nice try. Google's employees pay tax on their salaries, not Google.