Apple, Google, and Microsoft Hit with Massive Australian Tax Bill

Apple, Google, and Microsoft Hit with Massive Australian Tax Bill
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Apple has been slammed with another massive tax bill, this time in Australia for reportedly hundreds of millions of dollars in unpaid taxes. Following an extensive probe, the Australian Taxation Office (ATO) has accused the iPhone maker and six other major technology companies including Google and Microsoft of tax dodging, according to The Daily Telegraph. Collectively, the seven companies face a tax bill that amounts to nearly A$3 billion (US$2.2 billion), and individual fines are said to range between A$250 million and A$800 million.

ATO head Mark Konza said that the wide-ranging audit had involved more than 1,000 investigators and 71 multinational corporations suspected of engaging in tax avoidance tactics like ‘debt dumping’. Some companies are expected to settle up while others are reportedly prepared to contest the tax bill in court.

Financial Services Minister Kelly O’Dwyer has declared that the Australian government is determined to wrest back taxes owed by multinational companies in Federal Court: “The Australian government will make sure that everyone pays the tax they owe, whether they’re big multinationals or other individuals.”

It’s unclear whether Apple will pay, challenge, or attempt to negotiate the sum. However, Apple did issue a statement declaring that it complies with Australian tax codes, according to The Daily Mail.

Apple’s tax practices have been a subject of scrutiny for years now in various countries across the globe. Last year, Apple was slapped with a massive $14 billion tax bill by the European Commission, which found that the company had received illegal tax benefits in Ireland. Both Apple and Ireland are appealing the ruling.

Last month, reports surfaced that Apple had paid no taxes to New Zealand for a decade, despite earning NZD$2.4 billion in revenue during that timespan. In response to those concerns, Apple’s Australian arm issued a statement reminding the public that it was the largest taxpayer in the world and declared that it “aims to be a force for good”.

“We’re proud of the contributions we’ve made in New Zealand over the past decade. Because our products and services are created, designed and engineered in the US, that’s where the vast majority of our tax is paid,” an Apple spokesperson said.

While controversial, Apple’s tax arrangements are likely compliant with the letter of the law, if not the spirit. In response, countries like Australia have begun to crack down on tax avoidance and pass more stringent measures.

“Our multinational tax laws are having an impact and we now have one of the toughest, if not the toughest, anti-avoidance tax regimes in the world,” Australian Treasurer Scott Morrison said in a statement. “Multinational companies are being put on notice.”

Though other nations have begun to follow suit and attempt to close tax loopholes, many are skeptical that they will be successful when it comes to companies as large and with as many resources as Apple. Deborah Russell, a senior lecturer at Massey University’s accounting school in New Zealand, doubts that reforming leaky tax codes will do governments much good. “I think Apple is bigger than New Zealand – they’ve got tremendous resources to fight back,” she said to The Guardian. “Every time a government comes up with a new way to rein in these multinationals, clever tax accountants come up with a way around it. That’s essentially their job.”

Apple is currently sitting on an estimated cash hoard of more than $246 billion, which it has stashed outside of the US for tax reasons. If its cash pile was its own public company, it would be the 13th largest in the world, and more valuable than Coca Cola.

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