Technology giants Google Inc (NASDAQ:GOOGL), Apple Inc. (NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT) are facing Senate Inquiry into multinational tax avoidance.
The three companies along with nine other companies are facing audits by the Australian tax office. They also faced accusations of diverting their profits through low tax or no tax authorities such as Bermuda and Ireland. They were also accused of using business hubs in Singapore where corporate tax is 17% but can be pulled down through incentives.
Google’s tax report or 2013 included a payment of $7 million to the Australian tax from a profit of 46 million. The tax was charged at a rate of 15%, but Google Inc (NASDAQ:GOOGL) did not include the $2 billion income earned locally from its search engines.
Carnegie explained that the revenue gained from advertising was recorded in Singapore but did not disclose the amount. The amount cannot be disclosed due to the US financial disclosure rules.
The Managing Director of Apple Australia, Tony King, reported that the talks to review Apple’s advanced pricing agreement with the tax office had already kicked off a few months ago.
According to the books, the agreements cover a period of 3 to 5 years. According to Tony King, the previous agreement had already expired, and the company was in the renewal phase. He expressed Apple’s desire to renew their advanced pricing agreement with the Australian tax office.
King confirmed the company’s full cooperation with the ATO. He even described the audit process as severe and that the tax office has not provided an end date for the procedures.
Bill Sample from Microsoft Corporation (NASDAQ:MSFT) reported that the company had amassed revenue worth $2 billion. The revenues were from software sales and services offered to users by the company.
Though the use of hubs is not illegal, governments have expressed disapproval because they are losing some of their important revenue streams.
Most companies are using low tax countries such as Singapore to cut down the taxable amount. Though this means good business for the low tax countries, it has been inconveniencing other governments.
DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of USmarketsDaily.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: