Three of the world’s biggest tech companies generated more than $8 billion in revenue in Australia last year, but have refused to disclose how much of that money was sent offshore.
Apple, Google and Microsoft are being audited by the Australia Taxation Office, it was confirmed on Wednesday, amid suspicions of profit shifting and employing aggressive tax minimisation strategies.
The Senate inquiry into tax avoidance, sitting in Sydney, was told Apple Australia generated revenues of $6 billion last year, and booked a profit of $250 million. It paid $80 million in tax.
Apple Australia and New Zealand managing director Tony King insisted the company had not shifted profits offshore and paid its taxes ‘in accordance with Australian law’.
‘We’re very transparent with everything that we do in the Australian market,’ he told the hearing, and rejected claims Apple went out of its way to avoid paying full corporate tax in Australia by shifting money to jurisdictions with lower tax rates.
South Australian senator Nick Xenophon said the company was anything but transparent.
‘They need to change their name from Apple to Eel – that’s how slippery they’ve been,’ Senator Xenophon told AAP outside the hearing.
‘The lack of transparency is extraordinary.
‘How about they leave some decent taxes in Australia. Six billion dollars – I just found it extraordinary.’
Google and Microsoft also refused to disclose how much money they made in Australia was sent overseas.
Microsoft’s corporate vice-president of worldwide tax, Bill Sample, was sent from Washington to the hearing, and confirmed the company made $2 billion in revenue in Australia last year.
‘The $2 billion is billed by the Singapore group and it’s paid to the Singapore group,’ he said.
Google Australia managing director Maile Carnegie said the reason the tech giant paid so little tax in Australia was because the majority of risk and investment undertaken by the company was in the US.
Google Australia and New Zealand made $358 million in revenue in 2013 and profits of just more than $46 million. The company paid $7.1 million in taxes.
But Ms Carnegie said the majority of the company’s taxes were paid in the US because that was where the global headquarters was based, where the company generated the most investment in research and development, and where it undertook the most risk.
‘It’s very easy to underestimate the risks and also the costs that are required, to develop that intellectual capital,’ she said.
Ms Carnegie said the next type of innovation ‘like a driverless car’ is made possible by that research and development.
‘The explanation for why an Australian multinational, whether they be in mining or in biotech, is able to generate the majority of their revenue outside of Australia but pay the majority of their taxes inside of Australia is that the Australian-based headquarters does most of the investment and carries most of the risk,’ she told the hearing.
The inquiry continues in Canberra on Thursday.