The Australian government is putting Apple’s tax payments under scrutiny after the California-based company reduced the amount of tax it paid locally to $40 million, despite boosting revenue to $6 billion in Australia.
Apple’s revealed its 2012 financial year numbers to the Australian Securities and Investment Commission late last week.
According to the filing, the company boosted revenues from $4.9 billion in the last financial year to $6 billion in FY12. Apple indicated that falling net profits in the last financial year, which dropped to $58.5 million, were the cause of tax payments dropping to $40 million.
To put Apple’s tax bill in perspective, local retailer Harvey Norman earned only $1.4 billion (a quarter the size of Apple’s) in revenue over the same time period but paid $11 million more in taxes.
The figures come as Julia Gillard flags national funding cuts and governments around the world grow angry at aggressive tax avoidance by big businesses.
Apple, like some other large multinational companies, may pay some income taxes on its profit to the country in which it sells its products, but it minimises them by using various accounting moves to shift profits to countries with low tax rates.
For example, the strategy known as "Double Irish With a Dutch Sandwich" routes profits through Irish and Dutch subsidiaries and then to the Caribbean.
Like other big companies, Apple then leaves large stores of cash overseas.
Clayton Utz partner Niv Tadmore, a member of the government task force investigating how companies minimise their tax bill, told the Financial Review that it was important to note that these companies are not doing anything that is illegal.
“The taxation base is being eroded by e-commerce and internet trade,” Tadmore said.
“What they’re doing may be 100 per cent fine under current laws, but the question governments are asking themselves is whether they should change the laws to capture more [tax]. “The best approach would be a consistent and co-ordinated approach by international governments . . . but historically agreement with more than two countries is difficult.”
Whether the Reserve Bank is equally surprised and by enough to cut the official cash rate when its board meets …