Underpaying of company tax

[pazza]

With thanks to United Voice, who recently scored a big win to get MCG cleaners $500000 in back pay, they have released a study today that shows that company tax is being dramatically underpaid.

http://www.smh.com.au/business/the-...ions-a-year-report-finds-20140928-10n3n3.html

If the Government were actually serious about tackling the "budget emergency", why not get the revenue stream right and ensure that the correct amount of company tax is paid by the biggest companies.

 

[The Coup]

Because our government governs for those companies ahead of the people. Any benefits to the people are incidental. Its all part of liberal economic ideology.

 

[noddy]

Should be a RC into the scoundrels of multi nationals that steals from the tax payers of our country.

But Rupert has already stated that there is nothing to see in regards to News Corp & Foxtell.

 

[Ice-Wolf]

Should be a RC into the scoundrels of multi nationals that steals from the tax payers of our country.

But Rupert has already stated that there is nothing to see in regards to News Corp & Foxtell.

Only because what they have done is only unethical not illegal which really is a step up for News Corp.

 

[telsor]

Because our government governs for those companies ahead of the people. Any benefits to the people are incidental. Its all part of liberal economic ideology.

Thank god the ALP did so much to stop it while they were in power.

The problem is with international laws/agreements and is very hard to stop.

e.g.
An Australian company, called A makes a $1Million dollar profit
Company A's subsidiary, Company B (based in Bermuda) charges it a $1Million fee for 'consultancy services'.
Company A now makes no profit, and thus, pays no company tax in Australia.
Company B makes a $1Million profit, and pays tax (at 0 percent rate) in Bermuda.

The question is, how do you stop that?
Basic stuff for an international company is that expenses are expenses, where ever they are incurred, so unless the government is going to declare some overseas expenses legit and others not (in breach of any number of international treaties), there is very little that can be done.

The only solution is to get those treaties changed, and like most international agreements, change is very difficult (especially as the companies profiting from this are undoubtedly putting a great deal of effort into 'lobbying').

 

[pazza]

A new tax...an overseas investment tax.

 

[telsor]

A new tax...an overseas investment tax.

a) It breaks treaties.
b) it's not overseas investment so much as overseas expenses that are the problem.

 

[Admiral Byng]

Stuff it, let's just invade and annex Bermuda.

 

[Ice-Wolf]

Stuff it, let's just invade and annex Bermuda.

just make it illegal to trade with companies in those nations.

 

[telsor]

just make it illegal to trade with companies in those nations.

Great...

So I pay the aforementioned 'consultancy fee' to a company in the US, which pays a fee to a company in Bermuda.

 

[Ice-Wolf]

Great...

So I pay the aforementioned 'consultancy fee' to a company in the US, which pays a fee to a company in Bermuda.

get the US to ban them too.

 

[greennick]

With thanks to United Voice, who recently scored a big win to get MCG cleaners $500000 in back pay, they have released a study today that shows that company tax is being dramatically underpaid.

http://www.smh.com.au/business/the-...ions-a-year-report-finds-20140928-10n3n3.html

If the Government were actually serious about tackling the "budget emergency", why not get the revenue stream right and ensure that the correct amount of company tax is paid by the biggest companies.

Have you missed the whole part where this is one of the key agenda items by Abbott and Hockey on the G20 agenda?? They've done more to stop this in 6 months than Labor did in the last 6 years.

http://www.businessinsider.com.au/j...ter-apples-iphone-6-australian-profits-2014-9

 

[greennick]

get the US to ban them too.

There are already ways to stop this happening, for example what he is describing is in fact illegal as it is merely for tax avoidance purposes.

 

[telsor]

get the US to ban them too.

and every other potential combination I assume....I don't like your chances getting the EU to ban trading with some of it's members (Ireland has a 10% tax rate IIRC), and getting the UK to ban trade with it's parts out also be interesting ('countries' like the Isle of Man, and the various channel isles have 0% corporate rates).

In other words, take the very slow process of changing international treaties on tax/accounting practices...as I said was the only option.

 

[Floor Pie]

and every other potential combination I assume....I don't like your chances getting the EU to ban trading with some of it's members (Ireland has a 10% tax rate IIRC), and getting the UK to ban trade with it's parts out also be interesting ('countries' like the Isle of Man, and the various channel isles have 0% corporate rates).

In other words, take the very slow process of changing international treaties on tax/accounting practices...as I said was the only option.

What you are saying is illegal.
According to the post above yours.

 

[Floor Pie]

Have you missed the whole part where this is one of the key agenda items by Abbott and Hockey on the G20 agenda?? They've done more to stop this in 6 months than Labor did in the last 6 years.

http://www.businessinsider.com.au/j...ter-apples-iphone-6-australian-profits-2014-9

I'm not sure how that is addressing the tax avoidance of Australian companies.
Can you explain it to me please? I think I am missing something.

 

[Taylor]

Why not turn Australia into a tax haven?

We contribute such a small amount that a slashing of that revenue could be offset by the new corporate finances.

 

[greennick]

I'm not sure how that is addressing the tax avoidance of Australian companies.
Can you explain it to me please? I think I am missing something.

Just an example of what they are doing around tax avoidance, only posted that one as I read it tonight.

The international tax avoidance issue applies to Australian companies operating abroad just as much as it applies to overseas companies operating in Australia. The same rules are what companies are using to a̶v̶o̶i̶d̶ minimise tax both locally and abroad, so Apple's loopholes need to be shut down at the same time as James Hardie's.

 

[Floor Pie]

Just an example of what they are doing around tax avoidance, only posted that one as I read it tonight.

The international tax avoidance issue applies to Australian companies operating abroad just as much as it applies to overseas companies operating in Australia. The same rules are what companies are using to a̶v̶o̶i̶d̶ minimise tax both locally and abroad, so Apple's loopholes need to be shut down at the same time as James Hardie's.

So they are bringing in legislation to stop tax loopholes in Australia?
That would be fantastic! Watch the budget emergency disappear faster than Hockey can say it no longer exists!
Seriously, if they are introducing legislation to stop companies avoiding tax in Aus, I will support nearly everything else they do!

 

[medusala]

Poor old Fairfax. First the idiotic article re Hawks supporters and Goodes, now this. Still, not a bad trawl, got a few sardines.

From Bus Spectator

Corporate tax avoidance reports avoiding real facts

Those would be the conclusions, if they weren’t built on a complete absence of the facts. The report is remarkable for the shallowness of its understanding of corporate taxation and, indeed, of the entities it points the finger so accusingly at.
Of the “Top 27 companies ranked by average effective tax rate”, 20 are either property trusts (16) or infrastructure trusts (4).
The authors presumably don’t understand the difference between a trust and a company. A trust doesn’t pay tax — it distributes its net income to its unitholders. The unitholders pay tax on that income. It shouldn’t be a surprise to anyone that the trusts pay little or no tax as that’s what they are designed to do, and what the tax law allows.

Then there’s a ranking of average annual tax revenue forgone, which concludes that had the companies concerned paid the full tax rate they would have generated an additional $8.4 billion in annual tax revenue.
The top-ranked company in that list, with average annual tax forgone of $1.6 billion, is 21st Century Fox (once part of News Corporation, publisher of Business Spectator).
There’s a small problem with pointing an accusatory finger at Fox. It isn’t an ASX 200 company and it isn’t an Australian company. It is US-incorporated and headquartered and the vast majority of its earnings are generated in the US. It has only minor operations in Australia. It’s nonsensical to apply the Australian corporate tax rate to the US earnings of a US company.
Number two on that list of companies ranked by revenue forgone is SingTel. SingTel! Well, it is listed on the ASX and does have a large Australian business in Optus but it also operates in about 25 countries across Asia and Africa as well as being the dominant telecommunications business within Singapore, where it is headquartered.

 

[Floor Pie]

Poor old Fairfax. First the idiotic article re Hawks supporters and Goodes, now this. Still, not a bad trawl, got a few sardines.

From Bus Spectator

Corporate tax avoidance reports avoiding real facts

Those would be the conclusions, if they weren’t built on a complete absence of the facts. The report is remarkable for the shallowness of its understanding of corporate taxation and, indeed, of the entities it points the finger so accusingly at.
Of the “Top 27 companies ranked by average effective tax rate”, 20 are either property trusts (16) or infrastructure trusts (4).
The authors presumably don’t understand the difference between a trust and a company. A trust doesn’t pay tax — it distributes its net income to its unitholders. The unitholders pay tax on that income. It shouldn’t be a surprise to anyone that the trusts pay little or no tax as that’s what they are designed to do, and what the tax law allows.

Then there’s a ranking of average annual tax revenue forgone, which concludes that had the companies concerned paid the full tax rate they would have generated an additional $8.4 billion in annual tax revenue.
The top-ranked company in that list, with average annual tax forgone of $1.6 billion, is 21st Century Fox (once part of News Corporation, publisher of Business Spectator).
There’s a small problem with pointing an accusatory finger at Fox. It isn’t an ASX 200 company and it isn’t an Australian company. It is US-incorporated and headquartered and the vast majority of its earnings are generated in the US. It has only minor operations in Australia. It’s nonsensical to apply the Australian corporate tax rate to the US earnings of a US company.
Number two on that list of companies ranked by revenue forgone is SingTel. SingTel! Well, it is listed on the ASX and does have a large Australian business in Optus but it also operates in about 25 countries across Asia and Africa as well as being the dominant telecommunications business within Singapore, where it is headquartered.

Poor old Murdoch.
Not a bad distraction, got a few kippers.
An opinion piece written by Stephen Bartholomeusz...
http://www.theaustralian.com.au/bus...iding-real-facts/story-fnp85nwc-1227075223748

Therefore the study is invalid!

 

[greennick]

The bio on the guy who "reviewed" the study...

Roman Lanis joined the School of Accounting in 2004. He has undertaken research into the impact of culture on accounting systems development, with specific reference to the transitional economies of Eastern Europe. Recent research activities have included the development of a cross-cultural framework in the area of tax and accounting harmonisations.

Roman's work has appeared in leading Eastern European economics journals. Roman's other interests include the development of international accounting standards, their applicability to developing nations and the present state of accounting/business education in the former Soviet Republics.

This definitely seems like a good guy to get involved in this study, he must have been very knowledgeable on Australian companies and the taxation system in which they operate with all his studying of the harmonisation of Eastern European accounting standards in the light of differing cultural norms.

 

[Floor Pie]

The bio on the guy who "reviewed" the study...



This definitely seems like a good guy to get involved in this study, he must have been very knowledgeable on Australian companies and the taxation system in which they operate with all his studying of the harmonisation of Eastern European accounting standards in the light of differing cultural norms.

Who and what?

 

[telsor]

There are already ways to stop this happening, for example what he is describing is in fact illegal as it is merely for tax avoidance purposes.

It was a summary. Naturally it would be disguised somewhat better.

 

[medusala]

Poor old Murdoch.

Good point FP. His co pays tax. The ABC costs around $1bn a year. Truly disgraceful

By the way, how much to you reckon illegal streaming costs in lost GST revenue?

Where is the outrage over that? Odd do you not think?