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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."
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.
seems fair to me
Don't Apple own all the patents on tax evasion techniques?
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.
From scarped cliff or quarried stone she cries "A thousand types are gone, I care for nothing, no not one."
this is a fairly simple story of the risk of treating restrictions on freedom of speech as property. if you have to shift screws around the world to evade taxes it costs real money and the tax authorities can easily see if the value is wrong. When it comes to Google's trademark the value is whatever someone is willing to pay. Something that Google happily and legally adjusts to get the best tax benefit. They also don't need to do anything to make the sale to themselves.
Simply stop tax deductions for "intellectual property" whilst charging corporation tax in the place where the customer lives and this would go away.
Good on any company for minimizing their tax liability.
Fuck that, I personally paid more than $75k in tax last year and I sure as hell didn't have revenues anywhere near $1B.
Good luck to France and Australia. I hope the gets tough and does something similar rather than just waste our money talking about their taxes.
We proud hungarians would also like to have our share of this Great Internet Money you talk about. Our 1000 year old history surely puts us way ahead in tax collection rights from big faceless international corporations.
Tax 'paid' by corporations isn't paid out of some magic free money pot. It is paid by a combination of their employees, customers and shareholders (frequently pension funds). In addition, we are talking here about tax on profits. Google will have paid plenty of tax on its employees salaries, as well as business rates, VAT etc.
Why would you expect a company to pay more than they have to when individuals do not?
Why would you expect a company to pay more than they have to when individuals do not?
Most individuals don't funnel their money through foreign tax shelters.
Companies are obliged to pay something called "payroll tax", which is linked to the salaries of the workers but separate to the income tax that is taken out of employees' pay.
http://en.wikipedia.org/wiki/Payroll_tax
Has anyone here ever paid more taxes than they owe
Probably not. But while paying 75k out of a 1B revenue is probably/certainly legal... that shows there is a problem with nowadays local and international laws / rules. The problem is that most of our economy rules are based on a system designed long ago, from a time where a man in a company did matter.
Slashdot, fix the reply notifications... You won't get away with it...
They don't need to be in every country in the world. If their taxes go up, they can just as well decide to pack up and leave.
The point is whether Google issues invoices from the USA company or from the natcos. In the former case, it's OK they don't pay tax to other nations' governments. In the latter Google has been evading the tax.
Sent as ripples into the electromagnetic field. No single photon has been harmed in the process.
No, they funnel their money through domestic tax shelters.
Pretty much any 'fringe benefit' you get at work is not counted as gross income and thus not taxable from the employees perspective. At the same time the cost of these fringe benefits is tax deductible by the employer.
Drive a company car? You are avoiding payroll taxes by accepting a portion of your income as reduced personal costs.
Use the companies daycare? You are avoiding payroll taxes by accepting a portion of your income as reduced personal costs.
Does your company provide food and/or beverages? You are avoiding payroll taxes by accepting a portion of your income as reduced personal costs.
Does your company have a fitness center, or contract out for preferred rates at the local gym? You are avoiding payroll taxes by accepting a portion of your income as reduced personal costs.
The fact is that individuals do not consider these benefits 'income' but they are, none-the-less, part of your compensation package and should be taxable under your fucked up sense of morality.
"His name was James Damore."
There's a practical difference (at least that's how it's defined in Switzerland - which is one of the possible tax avoidance place, although far less attractive than the ones in the summary).
- One is *lying*, giving false information and not paying the taxes you're required by law to pay. You pretend you don't have money and try to hide it (in order not to pay taxes. But according to the law you should be paying taxes). This is illegal. A person or a company doing so should be persecuted.
- The other is just shifting money around. You're absolutely honest and give any needed information out. You simply move the money to another place, where the tax happen to be lower than the first place. Once there, you openly collaborate with the local tax institution, declare all the money you have and pay all the taxes you're required to pay. It just happens that said taxes are lower than in the country of origin. But nothing is hidden, all money is openly accounted for. No one pretends anything false. This *IS LEGAL*. A person or a company doing so is just cleverly playing the system. WHAT NEEDS TO BE DONE is collaborating with the local government so some tax money is funneled back to the original country.
Ireland, for example, has almost no taxes. There's nothing wrong in the law about storing your money there. There's nothing wrong about paying almost no taxes (as long as you declare everything and don't hide anything). If you're unhappy with this, you should bring to court the company putting their money there. you should instead write to your politician asking that the European Union finally comes up with a solution for EU-level taxes (so money is shared between Ireland and the other countries where the money was prior transfer but were the company isn't paying taxes).
"Sufficiently advanced satire is indistinguishable from reality." - [Tips: 1DrYakQDKCQ6y52z6QbnkxHXAocMZJE61o ]
So the long-terme solution would be a european law, asking ireland to reshare part of its income to other countries depending on how much money they store, so that healthcare, education, public transportation, etc. can be also produced there.
"Sufficiently advanced satire is indistinguishable from reality." - [Tips: 1DrYakQDKCQ6y52z6QbnkxHXAocMZJE61o ]
Most individuals can't funnel their money through foreign tax shelters.
There.. fixed that for you.
bickerdyke
"Tax avoidance" doesn't appear to phase General Electric. They're definitely not an "internet company," have physical plants around the globe, and they pay a vanishingly small amount of corporate tax by using the same sort of schemes.
Imagine that....large corporations with armies of lawyers using lobbying to help them skirt tax payments to ultimately benefit their shareholders. And I guess it helps to have friends in high places. Guess who is Barack Obama's "jobs czar?" That's right, Jeff Immelt...CEO of GE. In 2010 GE made a global profit of US$14.2 billion. US$5.1 billion of that was attributable to operations in the US. How much did GE pay in taxes to the US government you ask? Well, zero. They actually had the balls to claim a tax benefit (billed against future earnings) of US$3.2 billion.
I'm all for companies being able to make a profit, but c'mon.
Actually, there's a very sensible approach to this, somewhat started in the UK already. We, as citizens, decide that we dislike this kind of behaviour and we boycott the worst 'offenders'. As an old-skool Brit, I'm a tea drinker anyway, there's nothing that I like in Starbucks and I dislike the appalling value for money too.
There's a genuine problem here in that a) it's their fiduciary duty of corporations to maximise profit at all costs, to hell with social infrastructure, the environment and other minor details so this is one of the results b) in the UK the so-called Tax Code runs to about 10K pages of useless complexity, so there's always a decent sized hole somewhere c) If the holes aren't closed everywhere, there'll usually be a new opportunity or place to do this, it's called fiscal dumping.
Finally some socially aware sharefolder activism would help, in some of these cases, but since shareholders are usually large investment funds and insurance companies, there's no pressure from there either. So consumer boycott and sustained negative commentary is a good start, then profits decrease and shareholders begin to wake up and take a mild interest.
On y va, qui mal y pense!
How many individuals do you know that pay 0.1% tax? You might want to reflect on why that is before claiming the two situations are remotely equivalent.
Your sense of scale is somewhat out of whack if you are comparing tax deductions on child care (which allows people to work while providing jobs for child carers) to industrial tax evasion by some of the largest companies in the world.
If you think someone isn't free to have a different definition of "freedom" you may be a tyrant.
.... google not paying protection money?
Point is, what effect does paying or not payinmg taxes really have on economy?
What are the governments really doing with the tax revenue?
I think that is a far more relevant question to ask first, before pursuing claims of income tax evasion.
In the US the government is supposed to represent the people but how are they to do so, how are they to know how in the republic, where all voices count (vs. democracy where majority rules) unless the people, each how pay taxes, say where the taxes they pay are to be used?
Its all about business and when you pay for something you decide what it is your buying....You don't just give a seller money and let them decide what they will or not give you in return.
Maybe Google should be paying taxes....... But are the taxes that are being collected being used correctly?.
Just like with other things, they use 'bad terms' to represent 'legal actions' to manipulate the public's opinion against the companies/people.
And since people in general are stupid, it tends to work every time.
---- Booth was a patriot ----
No. A lot comes out of consolidated revenue - which means government income from any tax or charge.
If that's what Google want to claim, then that's what we'll do.
Make payroll tax depend on turnover.
That's because very few individuals can take advantage of nearly as many loopholes written into the tax laws as big corporations can.
The truth is that all men having power ought to be mistrusted. James Madison
Do you even know what their deductions are?
They're pretending to pay another arm of the company in a low tax regime for services at an uncompetitive rate. I.e. a rate that would have the shareholders demanding the entire board be sacked and sued for devaluing the company.
They do this so that they can then claim the deductions are more than their profits before deductions and therefore pay no tax.
Those services ARE NOT worth the money paid for them.
And they know it.
And they then tell the government(s) "We made no profit" whilst telling their shareholders "We made bags of profit!". One or the other is lying.
It is exactly the same as Hollywood Accounting.
It's interesting how Apple is more profitable, but it seems that Google is the one getting the attention. Apple was highlighted by the NYT in April of 2012: http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html?adxnnl=1&pagewanted=all&adxnnlx=1353677512-m5vLQkPH5461NGq9bcQvqw
You can't bend reality to meet your perceptions.
As long as they apply equally to ...
Microsoft
Apple
Shell
Exxon
all offshore bank accounts...
I believe these have the same avoidance as Google.
Yes, there are deductions I could have claimed on my last tax return that weren't worth chasing down the receipts for. So count me as one who has paid more than they have to. I could also have set up an offshore company to work through rather than becoming an ordinary income tax paying salaried worker. In fact, I may have also paid more than Google some years (maybe not with the current $AU exchange rate), and I certainly had nowhere near $1 billion in revenues.
all the big companies do this, microsoft, apple, amazon, etc list goes on
The other is just shifting money around. (...) This *IS LEGAL*. A person or a company doing so is just cleverly playing the system.
Actually, this is only legal on paper. In practice, what's legal isn't so much about what the law says than it is about how a court sides on a case.
If you're convinced otherwise, I suggest that you put your money where your mouth lies. Specifically, create a company in a tax haven, and a subsidiary thereof in the country you live in. (If you're an employee, tell your employer that, in order to optimize your respective tax bills, you'd like to work as a consultant.) Pay yourself a reasonable salary through the local subsidiary, and then funnel the remaining profits back to yourself as dividends through the tax haven company. This is all legal on paper as long as you dutifully declare everything properly.
Tax authorities, as you might expect, see things in a very different light. When individuals and small businesses do this, they get slammed in court. Larger corporations, by contrast, get away with it in the name of keeping jobs around or of keeping financial markets alive. Or rather, did until now.
Ultimately every dollar someone avoids paying to the federal or state governments is an extra dollar someone else has to pay. Technologically we're almost to the point where we could actually tax every single transaction that occurs with the currency, and I'd actually rather have that than the jumbled mess we currently have. Of course, the way things work, we'd probably end up having that AND the jumbled mess we currently have.
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
Your sense of scale is somewhat out of whack if you are comparing tax deductions on child care (which allows people to work while providing jobs for child carers) to industrial tax evasion by some of the largest companies in the world (which allows tens of thousands of people to work and provides jobs for many dozens of specialties.)
Fixed that vitriol for you.
In the United States, 35 million families (I looked it up) each getting $5000 per year in nontaxable daycare compensation (95% of employers offer it), which would have been at the individuals highest marginal rate (its off the top, after all), well thats a lot of fucking missing tax revenue, and just one kind of domestic tax shelter that individuals exploit.
I think your sense of scale is whats in doubt, or that you really don't understand why tax policies are what they are, including the taxes on corporations. Taxes are used to reward and punish the behaviors of both individuals and corporations. This is most often implemented as a high base rate (punishment by default) with deductions (reward if the behavior qualifies.) Businesses are ALLOWED to do what they do, just like individuals are ALLOWED to do what you do, AS A REWARD.
"His name was James Damore."
Please go after Apple too while you're at it, oh and pretty much any moderately sized company. This kind of things is pretty much common practice in the business world. This is just another example of a greedy govt wanting more money, by going after the big fish in the pond instead of all the other smaller ones.
Cash is great for avoiding taxes.
Can you guess what tax rate I paid on the medicine I grow in my backyard?
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
On our tax forms, there's a line that reports how much in taxable benefits I've received from my employer... and I am required to pay taxes on that amount.
Is it 30% of a hemp sandle?
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
if the government and the people don't like the tax laws then they should change them.
the government made the thousands of pages of laws and expect companies to comply. why are they all butthurt now that the companies hired professional rules lawyers to powergame? GREED. You have something, we want it. We are the government so give it to us.
It's really depressing.
All these socialist comments about Ireland's income tax being way too low and how things would be better if Ireland were to raise the level to crazy-high european standards.
What's next, venerating Keynes? Keynes failed. Too bad he didn't live to see his abysmal failure. His disciplines, like Krugmann, have now to use lies as a last line of defence (Krugman recently blatantly lied about the number of public servants supposedly going down in the U.S. during the last four Obama years).
Can't you see that the current euro, japanese and U.S. crisis are a crisis of "too much government"? We're assisting at the failure of the nanny states and the failure of Keynesianism.
When taxes are too high you're depressing would-be entrepreneurs and you're preventing the efficient creation of future growth.
What would be needed is not Ireland to raise its taxes to socialist-borderline-communist levels but other countries to lower their taxes to the Ireland level.
I'm really getting tired of this bullshit Keynes / socialisto-communism / slavery-begging that /. is becoming.
Off to hacker news where at least most of the people have an entrepreneurial mindset and are trying to build things. Trying to create future growth. Despite all the obstacles put there by Mao / Kim Jong Ill fans...
I'm in eastern Europe and I think that if all you leftist had seen eastern Europe before and after the fall of communism you'd be much proner to praise liberalism and freedom instead of slavery-inducing socialism.
So think twice before writing b*llshit about tax levels that should be harmonized to some crazy-high confiscatory levels.
They allow people to work for them? How charitable. You deserve the corporate hell hole you'd voluntarily make for yourself if you believe that drivel.
For the hell of it, I looked up "Santorum," and Google stated that he was a US Senator and Republican presidential also-ran in the 2012 primary campaign.
I then looked up "Australian government" and "France", and Google reported that the words both meant the same thing: "the frothy mixture of lube and fecal matter that is sometimes the byproduct of anal sex."
Does this make sense to anyone here?
Australia has a law that the sole or dominant purpose of a scheme cannot be a lower amount of tax.
If we know how much it takes to run the government only after it has run, why not make the tax rate a paramutual setup, where we all have an equal stake in the final tab? Having loop holes in the tax law are setup to inspire things that are for the common good, seem wise but seem to be the cruxes used by those that "game" the system. THere are many "smarter" people that would figure out how to crack all but a fair distribution method..... which by definition would not be gamable, provided we all have an equal share. All we'd need to do is identify the means the equare the value of a contributions by a laborer, a manager, a vice president ... etc.
That way at the end of the quarter, we'd have a balanced budget every time. Anticipating every katrina and sandy out there is an insane mandate. Just make it paramutual.Sure, business loves predictabilty, but how often is reality predictable? Business needs to accept risk and social responsibiltiy.
If those deductions were worth billions of dollars to you; do you believe that you would have the same attitude?
I believe most individuals wouldn't pay any tax at all if there were no punitive response from the government for not doing so
Microsoft does it too. Recently in my country someone pointed out that while goverment pays huge sums for software to Microsoft, most of this money doesn't get even taxed.
For US corporations profit is only sane thing for them. Being good and responsible corporative subject of the country - naaah.
user@ubuntubox:~$ stfu This server is going down for shutdown NOW!
While some people treat the alternative minimum tax (AMT) as if it's evil incarnate, the only reason it exists is that EVERYBODY knows greed compels people to avoid paying taxes. A corporate version of the AMT would mean Apple, Google, Microsoft, et al could do a double Irish with a Bermuda twist as much as they want but they would STILL pay (say some lowball number 10-15%) on profits earned in a given country. And that would be IRS calculated profit! Now the only way it would work is if there were strong disincentives to current practices. The US House is too dysfunctional to revise the tax code in an intelligent manner. So one option would be if the President reallocated some resources (say FBI/CIA) working to create the IRS equivalent of a major crimes division. Not only could they track the profits but even better they could bring criminal charges against lawyers, accountants, bankers, CEO/CFO, corporate boards that get even close to breaking the law. Waterboard a few Kellogg or Wharton boys and I bet patriotic taxpaying will rise dramatically. Now to entice the raving loons about tax increases, you allow corporations to CHOOSE between the current system (35% + automatic audits yearly) or the new AMT. Choosing the AMT would be a de facto reduction in the corporate tax rate which would benefit EVERY company. In particular, it would be a boon for the hundreds of thousands of small businesses (that don't have an army of lawyers/accountants) that have dutifully paid the corporate rate. A few of the worst corporate citizens might even take the opportunity to repatriate the trillion or so in profits they've parked overseas.
Some of you raise voices that tax evasion is evil, unfair or whatsoever. But it is merely playing the rules, only better than an average-man. In my consideration the term "tax evasion" is only a negatively biased way of calling tax minimization - what is what any sane person does. You shouldn't blame companies for using loopholes in the tax system - if anything you should learn from them. Yes - probably most of the loopholes were created due to some unfair lobbying, but why would you blame Google for loopholes created by some mischievous Australian companies and rouge Australian politicians? And did you ever considered the fairness of different forms of taxation and its effects on economy? Did you take time to think which form of taxation does the least damage? Income tax and value added tax for instance highly demote being productive and make the exchange of services less profitable for individuals (companies aren't affected by this due to being able to deduce their expenses from being taxed). Probably the least unfair and destructive (which means it is still evil but the least evil option) is the property tax (i.e. land tax or ad valorem tax) as it doesn't hinder productivity and it reflects what government really is - in this case a tenant to all the companies and people living on the territory of the country it governs. People tend to fear this tax, because it frightens them to pay tax just for having something (land, real estate, money) but they forget that in reality in most regimes they are only granted this possessions by the government, and it always has the power to take those possessions away, so they don't really own them. They also forget (or don't know) how much do they pay in taxes which is in reality between 40% and 90% of income in most countries (taking in consideration all of paid taxes - income tax, value added tax, inflation, ...). They also forget that this tax target mostly those who poses the most wealth - the rich, not the poor (which is exactly opposite to the other taxes).
To sum up - don't blame the player - blame the game. ;)
These tax avoidance schemes play a significant role in the current global financial crisis, and the debt problems of countries like the US. It also represents an highly unfair competitive advantage for large multinationals in competition with smaller national-scaled companies.
But, it *still* *completely* *LEGAL*. Unfair, unethical, but legal.
If you have a problem with that, don't sue them.
If you have a problem with companies gaming the system in order to take advantage of it, don't try to hit them (other will take turns and you're in for a huge whack-a-mole game). Try to change the system itself. Try to bring new laws, try to create new international tax scheme.
(And try to find a way to do it without alienating said company and having them run away from you).
"Sufficiently advanced satire is indistinguishable from reality." - [Tips: 1DrYakQDKCQ6y52z6QbnkxHXAocMZJE61o ]
...yup but sadly 2 decades after Maastritch, there still isn't a common EU taxation law.
So currently, corporation get to game the system all they want - thanks to the increased mobility offered by the european union.
But there's no way for the state to get money to finance eduction, health, and so on. Because of lack of a European-level tax.
(more likely instead of an actual tax - i.e.: an extra tax to be paid by individuals and corporations - it would be better as flux of money between states. If all corporation run away to ireland, it would be fair for ireland to pay to the EU a share of the increased income coming from the companies moving in).
Curriously: although it's not even actual part of the EU but just having bilateral convention with it, and although its considered as a tax haeven, Switzerland DOES give money to the EU currently.
"Sufficiently advanced satire is indistinguishable from reality." - [Tips: 1DrYakQDKCQ6y52z6QbnkxHXAocMZJE61o ]