Tech giants reject tax dodge name and shame plan

Australia's plan to name and shame technology companies that use various machinations to reduce the amount of tax they pay down under has been carpeted by the very companies that use such schemes.

Condemnation of the plan has emerged from the Australian Information Industry Association (AIIA), Australia's peak technology industry body that says it membership includes Apple, EMC, Google, HP, IBM, Intel, Microsoft and Oracle. The AIIA has made a submission in response to “Improving the transparency of Australia’s business tax system,” a paper issued by Australia's Department of Treasury and cooked up by the nation's recently-convened Specialist reference group on ways to address tax minimisation of multinational enterprises. The paper suggested naming and shaming organisations that use tax minimisation schemes, not as a punitive measure but as a way to inform Australian individuals and companies about who's a good corporate citizen and who works the system.

On Vulture South's reading of the submission, the AIIA has five objections, namely:

• It's members already file all the financial paperwork they're required to, and it's already in the public domain;
• Naming and shaming “has a potentially damaging impact on the preparedness of these companies to continue to invest in and support, as strongly as they currently do, the broader digital economy agenda, continued investment in ICT capability development and innovation in Australia,when in fact they do meet their legal taxation obligations”;
• Naming and shaming “will cause more confusion and potential concern insofar as it is not clear that comparisons will be comparable and compromise commercial confidentiality”;
• Australia could “suffer downstream damage should businesses feel maligned and, as a consequence, withdraw from doing business in Australia”.
• Asking the Australian Taxation Office to name and shame politicises the organisation, which can't be good for the entire Australian system of government.

The AIIA therefore suggests Australia get busy in international gabfests, so it can fix the whole tax avoidance mess in a more holistic fashion than would be possible if a government department did something like point out that Microsoft Australia has Microsoft has long practised a technique called “transfer pricing” that means Australians actually buy from Microsoft Singapore. Australia should also not point out that Google has until this year made losses in Australia despite winning more than $AUD1bn in annual revenue and having a reasonably modest local presence that it's hard to see would have that much in expenses.

That position comes against a background in which a recent parliamentary inquiry into the prices Australians pay for technology products noted that Apple has claimed billions in expenses despite (reportedly) having fewer than 1000 employees and conducting no research and development or manufacturing on Australian shores.

There's no suggestion any of the companies mentioned above do or have ever done anything illegal on the tax front. The morality of their practices is for readers to decide.

You can read the full AIIA submission here (PDF). ®