Customers queue outside Apple’s Sydney store: companies like Apple have come under fire for tax shifting
Australian business groups are putting the interests of tax-avoiding multinational corporations ahead of taxpaying Australian businesses, according to billionaire retailer Gerry Harvey.
After accusing Australia Post of “aiding and abetting” consumers who attempt to avoid paying GST through its ShopMate goods-forwarding service in November 2014, the co-founder of Harvey Norman has now turned his attention to lobby groups he says are siding with global corporations that shift their profits between countries to minimise their tax bills.
“Without mentioning names, there’s a lot of lobbying going on, and they’re presenting their case as if they’ve got a legitimate gripe,” Harvey told Fairfax.
“They [multinationals] have lots of lobbyists in Canberra trying to present their case as to why they shouldn’t be penalised [over tax]. They’re arguing that they should be treated unequally. That’s a very hard argument.”
Harvey’s comments follow the release of tech giant’s Apple’s accounts, which revealed Apple paid $80 million in tax on $6 billion in revenue earned in Australia.
Harvey said the current situation creates an uneven playing field for Australian companies.
“If a company in Australia has to pay tax and the other one doesn’t, of course it’s a disadvantage,” he said.
“If one person has no voice, and the other person has a voice, that’s a disadvantage.”
But Kate Carnell, chief executive of the Australian Chamber of Commerce and Industry, told SmartCompany she is “disappointed” in Harvey’s comments.
“ACCI has been lobbying very hard to convince government, but also to convince the B20, to look at addressing the issue of large multinationals choosing where they pay tax,” Carnell says.
“We have been fairly vocal in the media, saying it is absolutely essential that companies pay tax in the country they earn the revenue.”
As well as lobbying on the home front, Carnell says ACCI has been involved in international efforts to reduce efforts by corporations to artificially reduce their profit in countries where the tax rates are high.
“We’re involved through the International Chamber of Commerce in the work that the OECD are doing globally with regard to BEPS [base erosion and profit shifting] … a huge amount is being done globally.”
Carnell says taking action on BEPS was a major recommendation out of this year’s meetings of the B20 and G20, and Federal Treasurer Joe Hockey is on the public record as saying more needs to be done.
“This isn’t a new issue, it was there under the previous Labor government, but Joe Hockey has been quite vocal about attempting and looking at change,” she says.
“You have a positive situation now when you’ve got B20 nations together with lots of big businesses reaching significant agreement that it has to change.”
While Carnell says Australia must “make it as hard as possible” for companies to engage in profit-shifting, she says we also need “a global scenario” that mandates companies pay tax where they earn their revenue.
“It’s not fair to anyone if this isn’t the case,” she says.
And the competitiveness of Australian SMEs will continue to suffer if action is not taken, Carnell says.
“The point we have made consistently to government is this impacts on the competitiveness of Australian SMEs because they don’t have the capacity to do it,” she says.
“They can’t set up a trust in Ireland to run their business or operate out of the Cayman Islands, they are operating here in Australia.”
“They are paying the tax that is required by law in Australia and it is just that bit more difficult to compete with global companies who may not be paying Australian rates of tax.”
SmartCompany contacted Harvey for comment but he did not respond prior to publication.