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In Australia, Google Pays Just $74k Tax On Claimed Revenues of $200 Million 345

Posted by timothy
from the avoidance-vs-evasion dept.
daria42 writes "Looks like Apple isn't the only company with interesting offshore taxation practices. The financial statements for Google's Australian subsidiary show the company told the Australian Government it made just $200 million in revenue in 2011 in Australia, despite local industry estimating it actually brought in closer to $1 billion. The rest was funnelled through Google's Irish subsidiary and not disclosed in Australia. Consequently the company only disclosed taxation costs in Australia of $74,000. Not bad work if you can get it — which Google apparently can."
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In Australia, Google Pays Just $74k Tax On Claimed Revenues of $200 Million

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  • Taxes suck. (Score:4, Interesting)

    by symbolset (646467) * on Saturday May 05, 2012 @01:18AM (#39899307) Homepage Journal
    This is just part of the campaign to tar Google with any brush they can. Read this. [thedailybeast.com]
    • Re: (Score:2, Interesting)

      by Anonymous Coward

      The problem is that corporations are allowed to give to politicians and that lobbying isn't required to be done via means that are available for viewing by the public. I wonder how much would change if the public had a right to go through the communications between lobbyists and politicians and see what deals were being made.

      • Re:Taxes suck. (Score:5, Informative)

        by Kotakee (2632245) on Saturday May 05, 2012 @01:39AM (#39899399)
        Google was one of the first companies to appear on Slashdot on these shady tax practices. I find it pretty funny that Slashdotters don't remember it and now there's been several stories about Apple and Microsoft doing it.

        Seriously, http://tech.slashdot.org/story/10/10/21/1627220/how-google-avoided-paying-60-billion-in-taxes [slashdot.org] . Back in 2010.

        Google only pays a 2.4% tax rate using money-funneling techniques known as the 'Double Irish' and the 'Dutch Sandwich,' even though the US corporate income tax is 35%. By using Irish loopholes, money is transferred legally between subsidiaries and ends up in island sanctuaries that have no income tax, giving Google the lowest tax rate amongst its technology peers. Facebook is planning to use the same strategy.

        • Re:Taxes suck. (Score:5, Insightful)

          by symbolset (646467) * on Saturday May 05, 2012 @02:35AM (#39899629) Homepage Journal
          Google makes their money with local ads. It's not unreasonable to expect that they pay local tax rates for local ads in Taiwan bought by local Taiwan businesses and served from local Taiwan servers. That is entirely different from making your software in Redmond, WA, licensing it through a Nevada puppet corporation and then laundering the money through the double-Dutch or Blind Irish mechanisms of financial wizardry to make the profit happen offshore when that same software is sold from Khazakstan to Bangalore, and all the points between.
          • Re: (Score:2, Insightful)

            by Kotakee (2632245)

            Google makes their money with local ads. It's not unreasonable to expect that they pay local tax rates for local ads in Taiwan bought by local Taiwan businesses and served from local Taiwan servers.

            Exactly. That is what Google is avoiding. Did you even read the whole thing? It's Google that is using the Double Irish tax trickery to funnel money out of the countries they generate income in.

            • They broke Amazon.

              They'll either break Google (10% tax on gross income) or force Google to make massive political contributions (aka blackmail) like they did for Microsoft.

              • by symbolset (646467) *
                You are seriously confused. The sums involved are far more than is required to buy a US Presidency, and all the key stakes in Congress. These are businesses, and they take the least cost course. Figure it out.
              • Re:Taxes suck. (Score:5, Insightful)

                by kraut (2788) on Saturday May 05, 2012 @05:16AM (#39900257)

                They broke Amazon.

                They'll either break Google (10% tax on gross income) or force Google to make massive political contributions (aka blackmail) like they did for Microsoft.

                For crying out loud: Companies pay taxes on profits, not revenues. If you read the article, "the company made a loss on paper of $3.9 million in that period. Both Google’s revenues and losses were up over calendar year 2010."

                If you a company makes a loss, it doesn't pay taxes. Why should it?

                Now, whether the accounting practices that lead to this loss are kosher or not, I don't know.

                • Re:Taxes suck. (Score:5, Insightful)

                  by TFAFalcon (1839122) on Saturday May 05, 2012 @06:03AM (#39900391)

                  And that's part of the problem. Since they only pay taxes on profits, they can easily set up a subsidiary in country X (Ireland in this case), where the tax rate is close to zero. Then they have the subsidiary bill the parent company a few billion dollars for nonexistent services. And look, the company is suddenly not making any profit.

                  • by Azghoul (25786)

                    See, for the purposes of keeping profligate, idiot bureaucrats under control, tax competition is a Good Thing!

                    If countries lowered their tax rates and vastly simplified their reporting requirements, companies would no longer have the incentive to run around and find all the loopholes. It's proven.

                    • Re:Taxes suck. (Score:5, Insightful)

                      by Eskarel (565631) on Saturday May 05, 2012 @10:54AM (#39901431)

                      Yes, exactly, we should all run our countries like Ireland. They have no corporate taxes so they must be a bastion of innovation with a booming economy and full employment.

                      Oh wait, they have a bunch of shell offices for major corporations which pay no corporate tax and hire one person, they're broke, and they're economy is fucked, let's not.

                      It's funny how the neo cons all forgot the Irish. A few years ago they were the country to be idolized if you were a conservative, low corporate taxes, close to zero regulation, everything they believe creates a wonderful economy. Then it all fell in a pile because their unregulated banks, with the help of unregulated US banks, fucked them, and the corporations they didn't tax paid no tax but didn't open up offices to generate other benefits. Now if you talk to a neo con Ireland is just like the other PIGS and must have been a dirty socialist pit with profligate spending habits.

                • by greg1104 (461138)

                  Of course the accounting practices are shady; that is the point. The Double Irish/Dutch Sandwich [wikipedia.org] uses transfer pricing [wikipedia.org] to move profits to wherever they will be taxed the least. So companies like Google get to benefit from local services for their employees--everything from public roads to local education to physical protection via the US military--while avoiding the taxation that pays for such things. It's tax fraud; if you or I were to try it, without millions of dollars to pump into top-notch accountin

                • by Nidi62 (1525137)
                  Do you believe every single movie in Hollywood loses money too? I bet Hollywood and Google use the same accountants.
          • by bloodhawk (813939)
            I would agree with you if google was actually paying local taxes, the whole point of the article is they DON'T, they funnel money through tax havens to avoid paying tax on locally earned money in countries such as Australia and the US. Str
        • They should have to use a proportional amount of infrastructure in the country where they claim they make their money. Particularly for multinationals, taxes should have less to do with how much they make and more to do on how much of the infrastructure they use in a country.

          Actually, why not just eliminate corporate tax altogether, and just charge them to use any local infrastructure. Want employees? Back pay their education and health care. Want to move goods? You pay for the roadways you use. etc.

          You pay

      • by symbolset (646467) *
        The problem is even deeper than that. Some of our best minds are working on it, but they have no solution yet.
        • by Sulphur (1548251)

          The problem is even deeper than that. Some of our best minds are working on it, but they have no solution yet.

          We have top people working on it.
          Who?
          Top people.

      • by symbolset (646467) *
        No, the problem is that most people are ignorant. And there's no help for it. Most people are (less informed) than us and that's not going to change. Our world is ruled by people who don't even understand what's happening to them, or why. Once you understand that, your mission is clear.
      • But even then, how is $74,000 tax on $200 million justifiable. Even after all the funneling.

        • Re:Taxes suck. (Score:4, Insightful)

          by mjwx (966435) on Saturday May 05, 2012 @06:47AM (#39900509)

          But even then, how is $74,000 tax on $200 million justifiable. Even after all the funneling.

          Good accountants. The tax rate in Oz on my current salary is around the 20% mark, I pay around 18% of my total income due to deductions, it means reducing my taxable income by about $2-4,000 per year, I still earned and spent the money, but it's not taxed because of what I spent it on (phone bills, internet bills, trade publication subscriptions(yes, I deduct /. subscriptions) and more) A good accountant pays for himself in a better tax return..

          But 0.37% tax is taking the piss when the corporate rate should be around 30% ish (educated guess, anyone got the real number, please let us know). I'm guessing they use a crap load of R&D concessions (the 20% time would be tax deductible here I think)

      • Actually I'd say that here the problem is more to do with lawyers than politicians. Even if you had good politicians lawyers are getting so good at finding and exploiting loop holes that you would be in a constant cycle of patch followed by crack as lawyers attempt to "jailbreak" a company's profits into low tax countries.
      • by symbolset (646467) *
        The problem is far deeper than that.
    • I beg to differ (Score:5, Insightful)

      by happyhamster (134378) on Saturday May 05, 2012 @01:43AM (#39899411)

      "Taxes are the price we pay for civilization."

          -- Oliver Wendell Holmes, Jr.

      • by Rayonic (462789)
        If all they were buying with my money was civilization that'd be fine, but they're buying a whole lot of other crap too.
      • by 7-Vodka (195504)

        Or maybe, taxes are the wealth you extort from others at gunpoint to pay for the civilization you want.

        Then again, you're no longer getting even that. Taxes are now used for wars and corporatism first and the civilization you want third.

      • by deego (587575)

        > "Taxes are the price we pay for civilization."

        Except that my taxes are funding illegal wars and the TSA instead that's being used to grope our children. By being forcibly taxed, I am an involuntary participant in all that. I have no right to opt out.

        If some of these "civilization"-y-things like local Fire department were allowed to be created spontaneously, at least they would be accountable to me. At least I would have the right to opt out if they start to use my dues to fund a war.
        ----
        As I understan

        • If some of these "civilization"-y-things like local Fire department were allowed to be created spontaneously, at least they would be accountable to me. At least I would have the right to opt out if they start to use my dues to fund a war.

          Of course, you don't pay Federal taxes for the Fire Department. Fire Departments come under State and/or Local taxes (depending on where you are).

          As I understand it, prior to a certain time, the US govt. did just fine with no taxes. It generated its revenue from import du

      • by jcr (53032)

        No, the price we pay for civilization is treating each other decently. Taxes are the price we pay for delegating some of our prerogatives as free people to the state, to exercise on our behalf.

        -jcr

      • by roman_mir (125474)

        Ha ha ha, you don't pay them, you want others to pay them.

        Progressivism:

        1. Saying that those who make money and don't give it to you are greedy bastards.

        2. Being generous with other people's money.

        --

        Taxes don't buy civilisation, taxes buy slavery.

        Civilisation is bought with individuals doing business and people participating voluntarily.

      • by Azghoul (25786)

        Oliver thought eugenics was a great idea, too.

        Time to stop invoking his one line that might have made the slightest bit of sense.

    • Re: (Score:3, Insightful)

      by Anonymous Coward

      You know, I'm a bit of a Google Fanboy. If there's a company I tend to forgive, it's Google, but let's dispel a few myths.

      Taxes don't suck. In the US, you let people die in the streets if they don't have a healthcare card. in Australia, we don't. Taxes go to public hospitals, maintaining roads and other social infrastructure and services.

      By Google not paying its fair share, like everyone else, they really are being dishonest - and I disrespect Google for that.

      On the other hand, Facebook is far, far worse

    • by X.25 (255792)

      This is just part of the campaign to tar Google with any brush they can. Read this.

      You are silly.

      This has nothing to do with Google, but with the fact that corporation are somehow allowed to pay incredibly small taxes, while you as a hardworking and honest person have absolutely no way to achieve similar tax rate.

      Question is - why is system favouring corporations?

      As if we don't know the answer already :(

  • by Anonymous Coward on Saturday May 05, 2012 @01:32AM (#39899367)

    Corporation tax is charged against profit, not revenue.

    A successful, well-run company can easily have a profit of $1 on revenues of billions and therefore pay only 25 cents tax.

    If a company is making millions and billions in revenue it usually indicates that they are ( 1 ) not paying realistic dividends to holders of preference chares and ( 2 ) they are not investing internally in R&D. Both those are booked against the profit & loss account.

  • by grasshoppa (657393) <skennedy@nOSpam.tpno-co.org> on Saturday May 05, 2012 @01:58AM (#39899485) Homepage

    What kind of fool of a company would Google be if it DIDN'T exploit every tool the government gives it to minimize it's tax burden? Furthermore, how irresponsible to it's share holders if it didn't utilize the law to achieve the highest rate of return.

    Google is not the villain here. No company is, when it's simply exercising the controls given to it by the government under which it operates.

    • by tftp (111690)

      What kind of fool of a company would Google be if it DIDN'T exploit every tool the government gives it to minimize it's tax burden?

      These tools are not given to Google by governments. These tools require a multinational corporation that hides taxes by using incompatible laws of multiple countries.

      MS does the same by playing on differences in tax laws of individual states (IIRC, all sales of all DVDs are done through a one-lawyer office in Nevada [microsofttaxdodge.com], and Redmond offices work at loss - hardly a surprise if t

      • Re: (Score:2, Informative)

        by grasshoppa (657393)

        There's nothing illegal about what Google is doing, right?

        Not the villain. They are using what tools are available to save as much money as they can. To put it another way, is someone a villain if they use coupons when they go shopping? If they go shopping during a sale?

        Obviously not. If the laws are in place to allow this behavior, then it follows that this is what the governments want.

    • by 7-Vodka (195504)

      Taxes don't come only in one package. There's taxes on corporate revenue sure, but then there's payroll tax, sales tax, dividend tax etc.

      In america if you own a corporation the government takes taxes from the revenue and then taxes from the dividends. On average the government takes double what the stockholder takes.

    • So being mean to someone is ok as long as you don't go over the line and harass them?
      It's ok to lie to people to get them to do non-economic favors for you?

      I could go on.

      Operating within the boundaries of the law is a lawful act, not a good one.

      Morals are seperate from the law, it's really that simple.

      Also, the main reason that these loop-holes exist is that it's hard to prosecute over national borders when it comes to taxation.

    • by Ralish (775196) <ralish@@@gmail...com> on Saturday May 05, 2012 @04:49AM (#39900167)

      Let me re-phrase on your behalf:
      "What kind of company wouldn't exploit every loophole or legal avenue available to pay the absolute minimum amount of taxes in the country they do business in and reap the benefits of? Hey, provided it's not actually illegal, who cares if it's wholly unethical?"

      At some level, it's a frankly depressing picture of humanity that we can so easily rationalise away doing pretty much anything in the name of material pursuit, so long as it doesn't outright violate national laws. What's worse, is that I hate the fact that governments are seemingly enacting ever more legislation, ever more restricting our rights, and yet, it seems that when it comes to things like tax law, the reason is because if they don't, people will abuse it unless it is absolutely watertight. Hell, people admit they are looking for and exploiting the system as if it's a badge of honour, as if they'd be somehow morally liable if they didn't abuse the system.

    • You conveniently seem to have forgotten that corporations using some of the money they save by minimizing their tax burdens to lobby the government to pass legislation that continues to facilitate their avoidance of taxation. This is a worldwide practice, but in the US in particular, this is clearly a case of disproportionate representation--for the amount of tax these companies pay, they get enormous power to influence policy.

      Looking at the bigger picture, it's also evident that different nations do not a

    • What kind of fool of a company would Google be if it DIDN'T exploit every tool the government gives it to minimize it's tax burden?

      Since when does being no fool imply being no villain? Aren't the greatest villains dangerous because they *aren't* fools?

      Google is not the villain here. No company is, when it's simply exercising the controls given to it by the government under which it operates.

      What if the taxation loopholes are mistakes and unintended imperfections in the laws? Then a company explo

  • by Grayhand (2610049) on Saturday May 05, 2012 @02:05AM (#39899507)
    They are calling it a translation error and that in fact the company motto is "Do Evil". Apparently "Don't" doesn't translate well from corporate BS to plain speak.
    • by geekoid (135745)

      If this was evil, then sure. Of course it's not, and Google is pretty damn good player. So good in fact people who are desperate to call it evil have to make up the thinnest excuses. If they didn't, they might have t think about their world view, and basing you 'opinion' and bases gut feelings requires less energy that, say, thinking.

    • by tangent3 (449222)

      "Do no Evil" seem to be becoming "Be less evil than Microsoft, Oracle, Apple and Facebook"...

    • by roman_mir (125474)

      Funny Orwellian double-gobbledygook, saying that not paying taxes is evil.

      TAXES ARE EVIL.

      Taxes are theft, forced labour, slavery.

      Avoiding taxes is a virtue, a moral obligation, goodness itself. We should all avoid as much as possible to ensure that the gov't has as little as possible, they are already stealing everything under the Sun just through inflation, it's gov't that is evil.

    • by gl4ss (559668)

      it's actually Do New Technology Evil.

  • by SuricouRaven (1897204) on Saturday May 05, 2012 @02:19AM (#39899555)
    It goes by many names. Tax avoision, tax optimisation, tax efficiency. Google does it, Microsoft does it, Apple does it... even the optician I use has a token headquarters in the tax haven of Gurnsey. Every major company engages in the practice, and they'd be stupid not to. Making a profit is the reason for their existance.
  • not just for Hollywood anymore.

  • by Time_Ngler (564671) on Saturday May 05, 2012 @02:33AM (#39899623)

    Slashdot - News for Accountants, Taxation that matters

  • not just large corporations.

    Not that it has the same value.

    And yes, it should be stop. Monies leaving the country should have the crap taxed out of it.

  • As an Australian citizen, let me just say this:

    Fuck me dead!

  • by dutchwhizzman (817898) on Saturday May 05, 2012 @03:48AM (#39899909)
    Maybe we should all say that copyright laws only apply if you pay taxes in that country? That will make them think twice about going to tax havens with no legal system that will endorse their claims of piracy, trademark or copyright violation.
  • I think people here don't seem to understand the Australian tax system.
    It is entirely designed to take money from productive individuals and hand it over to corporates, while cutting in the politicians who facilitate this. Then the government proceeds to hand over a few crumbs to the unwashed masses (a.k.a. taxpayers) from the sell-off of natural resources, while avoiding at all cost to invest anything in infrastructure.
    In such context, Google's contribution of $74,000 (which is less than half of the income taxes I pay as an individual Australian resident per year at the marginal rate of 48% for my income from hard work and lots of overtime) can be seen as a generous token, because most corporations seem to pay bugger all and just pocket obscene subsidies instead.

    • by DaveGod (703167) on Saturday May 05, 2012 @08:17AM (#39900807)

      I think people here don't seem to understand the Australian tax system.

      As an accountant, it's clear to me that people generally, but especially technology websites, do not understand any tax system. In the case of the latter I'm fairly sure it's wilful ignorance since there's a habit of neatly avoiding very obvious things that require mere common-sense to trigger realisation that they're spouting bullshit.

      It's equivalent to those media articles on hacking, with the picture of some hooded terrorist stealingz your megahurtz. There is activity to be concerned about, but anyone with the slightest bit of knowledge -- or simply combining common-sense and critical thought -- can just glance at it and find themselves shaking their head as they hold it in their hands, unable and frankly unwilling to decide on which is worse: that the media is so intentionally misleading or genuinely so incompetent.

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