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Australia: Apple remains open to renewing tax arrangement with ATO

05 February 2015   (0 Comments)
Posted by: Author: Aimee Chanthadavong
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Author: Aimee Chanthadavong (ZDNet)

Apple has revealed the company's existing tax arrangements with the Australian Taxation Office (ATO), while calling on Australia to revisit international collaboration opportunities to come up with consistent tax policies and frameworks for multinationals.

The Senate Committee on Economics has launched an inquiry into corporate tax avoidance by corporations registered in Australia and multinational corporations, such as Apple, operating in Australia.

In its submission to the Australian government's corporate tax avoidance inquiry, Apple has reassured that it "complies fully" with its Australian tax obligations, and has always maintained an open and cooperative relationship with the ATO.

The submission noted that Apple was one of the first multinational companies to enter into an advanced pricing agreement (APA) with the ATO over 20 years ago, which has since expired.

According to Apple, the APA set a framework and annual review mechanism that ensured "both parties to the agreement were satisfied that APL was complying with Australia's transfer pricing laws".

Apple said it is still willing to enter into a further APA for future years, and has made efforts since to renew it.

"In the meantime, Australian-based Apple customers continue to deal with APL directly, with revenue reported by APL in the company's statutory accounts and income tax returns," it said.

"APL continues to have an open relationship with the ATO, and continues to comply fully with its Australian tax obligations. APL's effective tax rate, both on a cash and an accounting basis, in each of two years following the expiry of the last APA, has been above the Australian statutory rate of 30 percent."

The Cupertino-based tech giant also said that international collaboration is essential to maintain consistency and certainty for both taxpayers and tax authorities.

The tech giant drew on the Organisation of Economic Cooperation and Development's (OECD) Base Erosion and Profit Shifting (BEPS) at the request of the G20 as a best practice example.

"As part of the BEPS project, the OECD has gone to great lengths to ensure that both OECD member countries and non-member countries, in particular developing countries, are at the table and participate in the policy conversations and proposals," it said.

"This type of collaboration across members and non-members is critical to ensure that there is a single set of recommendations regarding international tax reform as opposed to countries taking unilateral measures."

Apple noted that if the federal government decides to go it alone in tackling multinational tax evasion, it will only result in increased uncertainty and compliance costs for both taxpayers and tax authorities.

"We recommend that Australia continue to actively participate in the BEPS process, support gaining consensus amongst the countries involved in the BEPS projects, and avoid unilateral action."

Apple's recommendation to the federal government is similar to Google's, another high-profile tech company that has often been cited in discussing tax avoidance in Australia. It advised the Australian government against going it alone on targeting multinational tax avoidance, but prefers issues around taxation of multinational corporations to be dealt with by the G20 or the OECD.

The Australian government has previously called out Apple as one of many multinational companies for using the so-called "Double Irish Dutch Sandwich" method of funnelling money through lower-taxation countries, such as Ireland, in order to pay very low taxes domestically. However, Ireland has committed to phasing out its corporate loophole by 2020.

Recently, Australian Treasurer Joe Hockey labelled companies such as Apple as thieves, and said a global effort is required to combat companies evading tax.

In recent documents filed to the Australian Securities and Investments Commission (ASIC), Apple reported that it paid more than double in income tax for the 2014 financial year. During 2013, Apple had only paid AU$36.4 million compared to 2014, when income tax was AU$80.3 million.

This was an improvement from Apple's tax contribution in 2012, when it had decreased to AU$40 million from AU$94.7 million in 2011..

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Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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