It’s likely to be four years before the ATO sees any revenue, and the US may still put the whole OECD tax project on ice. Otherwise, what could go wrong? ausbiz
will cost $111 million to set up – and it will likely be at least four years before the Tax Office can expect any revenue.
Any actual tax receipts are unlikely to arrive until well after that. Perhaps it is as well that the ATO is well funded because the legal battles in extracting those tax receipts promise to be challenging. The Pillar Two system aims to make sure all companies pay at least 15 per cent tax. But do not expect that to be in Australia.As an example, a US tech company sells products or services through an Australian subsidiary which pays tax here on Australian income. That taxable income is low because the Australian subsidiary pays licensing fees to an associated company in Singapore, which pays 5 per cent tax on a slice of the funds but sends most of the licensing fees to tax-free Bermuda. Or Ireland.
Australia’s track record for cracking down on multinational taxpayers is modest. The centrepiece of this effort last decade, the 2016 multinational anti-avoidance law , targeted 44 companies and raised just $100 million in the income tax year, second commissioner Jeremy Hirschhorn told Senate Estimates in February. It also raised $80 million of net GST.
Apple’s 2022 results were for just nine months. “Normalising” that up to a full year, it is equivalent to $12.4 billion of sales, $521 million pre-tax income and $159 million tax. Apple Inc’s global gross margin was 43.3 per cent last year, so on an annualised basis its Australian gross profit was more than $5 billion, and the ATO got 3 per cent of that.It is more complicated than that.
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