From the Hansard: Google v Rent-seekers

Senator BRAGG: Turning to your tax affairs, how much corporate tax did Google pay in Australia last year?

Ms Silva : Last year Google paid $59 million in tax, and we comply with the tax laws of the land. We restructured our business in 2016 in line with the government’s shift and the change to MAL, the multinational anti-avoidance law. We shifted to a reseller model from then, and last year’s tax was $59 million.

Senator BRAGG: $59 million in corporate tax?

Ms Silva : $59 million in corporate tax.

Senator BRAGG: What’s your revenue in Australia?

Ms Silva : The gross revenue was $4.8 billion, and the profit before tax was $134 million.

Senator BRAGG: $4.8 billion, and you paid $59 million in corporate tax.

Hansard.

Senator Andrew Bragg was an accountant by profession before he entered into the parliament as a NSW Liberal senator. So I’m going to go out on a limb here and suggest that he probably knows full well the difference between revenue and profit.

What I want to do here is point out two other implications of that exchange:

  1. 59/134 = 44.03%. Google’s effective tax rate is well above the statutory tax rate of 30%. This is a manifestation of something called the book-tax income gap. This gap is reconciled in the notes to annual financial statements that each company has to produce every year. To suggest, however, that Google is doing anything dodgy based on those figures, however, is profoundly misleading.
  2. 134 – 59 = 75. That is how much money Google made in Australia after tax, $75 million and that’s Australian dollars. So a mere US$60 million (approx).  I wish I had US$60 million, but to put that number into perspective Google’s parent company is a US$1.2 trillion company. US$60 million might make it onto their books as a rounding error.
This entry was posted in Economics and economy, Federal Politics, Media, Taxation. Bookmark the permalink.

75 Responses to From the Hansard: Google v Rent-seekers

  1. Hydra says:

    1.2 trillion

    [fixed. thanks. Sinc]

  2. H B Bear says:

    Trying to tax Google would be like trying to wrestle smoke. I’m not sure I would go as far as defending them though. And yes, I have read enough notes to accounts over the years. Not sure I am any the wiser though.

  3. Dinky says:

    Sounds like the good senator got his business degree through the Alberici School of Economics.

    The focus should be on how Google is legally able to claim just over $4.6 billion in deductions. I mean it was the senator’s own party that introduced the immediate asset write offs for a starter.

  4. duncanm says:

    I always get the shits when politicians attack global companies like this.

    They comply with the law – if they don’t, then they should be prosecuted (rather than going after joe blo who deducted an extra $500 he shouldn’t have).

    If you feel they don’t pay enough tax in this country, then change the law.

  5. Bruce of Newcastle says:

    Of course Goolag is using transfer pricing and intracompany service fees to move profit to Ireland, where I believe their company tax rate is 6.25%.

    I really don’t care who wins this crud fight. The Federal Government hit companies with a stupid company tax rate, Goolag are totally evil – as we’ve seen in the US election cycle, and the MSM who want rent are a pack of propaganda excreters who deserve to be sent to North Korea. Hopefully Goolag will pull out of Australia and force a bit of red-pilling onto the Goolag-enthralled proles.

  6. duncanm says:

    The focus should be on how Google is legally able to claim just over $4.6 billion in deductions.

    they won’t be deductions, they’ll be fees to parent google/alphabet for IP, services, etc.

  7. Leo G says:

    To suggest, however, that Google is doing anything dodgy based on those figures, however, is profoundly misleading.

    How do you account for Google’s profit margin difference between the Australian and US operations (2.8% in Australia v about 21% in the USA)?

  8. At the same time a profit to turnover ration of what?, about 3% seems like Google must have a very large amount of operating costs. Intercompany loans, expenses, consultancies and the like flowing back offshore as legitimate business expenses. Don’t know. Have not seen the accounts but seems strange a major corporation would operate on a 3% margin. Just sayin”

  9. stevem says:

    The problem with Google it the way it shifts it’s money around. Google’s business is advertising and everything else it does is based around that. Now the made 4.8 billion in revenue in Australia and a mere $60 million if profit, on which it paid tax. The problem comes that the Google HQ in Bermuda probably charged Google in Australia $4 billion in license fees. These license fees are how Google shifts it’s liabilities from high tax countries to low tax.
    The same happens all around the world. In 2009 Google made €5.5billion profit in the EU and paid €5.467 to Google HQ in Bermuda leaving a paltry amount to pay as tax in Ireland.
    Every internet based tech company in the world does the same thing shamelessly diverting profits to the lowest taxing jurisdictions they can find. The international tax laws were written before companies could shuffle funds as easily as they can today.

  10. Ƶĩppʯ (ȊꞪꞨV) says:

    The focus should be on how Google is legally able to claim just over $4.6 billion in deductions. I mean it was the senator’s own party that introduced the immediate asset write offs for a starter.

    exactly, google’s real expenses are among the lowest in the tech world. revenue per employee is among the highest.

    this “reseller model” needs to be clarified.

  11. DaveR says:

    Here is third implication of that exchange, and clearly the most important one:

    3. $4,800m in revenue and only $134m in profit before tax in Australia. That means deductible costs of $4,666m in Australia, and a profit margin (before tax) of only 2.8%.

    Thats just not feasible for a major global business. A minimum of 20% margin is more likely.

    Profits are clearly being shifted offshore to lower tax jurisdictions, by the way of inter company charges and fees.

    That is the real problem, not tax paid on declared profit.

  12. Rorschach says:

    The gross revenue was $4.8 billion, and the profit before tax was $134 million.

    What are the costs offsetting the revenues to get only $134M profit? Most of the real costs will be in maintaining and upgrading various servers [sunk costs – probably long amortised and probably not in Australia] and possibly staff [likely very few in Australia]. It’s not like they have any inventory or face any costs for their web-crawlers accessing (even private/confidential) internet content.

    https://en.wikipedia.org/wiki/Google_data_centers

    So it’s prob international transfer pricing. Moving costs into high tax jurisdictions and profits to low tax ones. I’m guessing that if one looks at Google Aust costs there will be a MASSIVE ($bio type) license cost to a related or parent Alphabet company in Ireland (where from memory Google has a near zero tax agreement) or some tax haven like Bermuda etc.

    May be legal … BUT!

  13. H B Bear says:

    Has anybody had a look at the US filings of the US parent? There is a big difference between a subsidiary paying tax in an (minor) overseas jurisdiction and paying no or an “unfair” amount of tax. Uncle Sam is usually pretty good at getting his cut.

  14. H B Bear says:

    May be legal … BUT!

    Like all good Socialists Google prefers to spend OPM.

  15. C.L. says:

    On tax, I thought this was worth posting in full:

    High Court being asked to back tax unfairness

    ROBERT GOTTLIEBSEN

    The High Court of Australia will in 2021 determine how large parts of the employment-generating small and medium business sector is to be taxed.

    The Australian Taxation Office firstly wants the High Court to give it the power to tax people on income they have not received and will not receive.

    And, in a second case, it wants the catch-all section 165 power to be applied, using emails between parties not directly involved in a transaction as evidence to bankrupt people without any cross-examination of the taxpayer about those emails.

    No other taxation authority in the Western world would seek such powers—they are reserved for ruthless dictators.

    The High Court will determine whether it will hear appeals over full Federal Court decisions that declared clearly that the law of the land did not allow the ATO to exercise such vicious powers.

    What makes the situation so dangerous for the nation is that there is no effective Australian appeal system in taxation assessments, unless you are very rich.

    It is bizarre that in 2020 the ATO brilliantly executed Josh Frydenberg’s JobKeeper scheme and saved vast numbers of smaller and medium businesses — often the very businesses that it now seeks the power to destroy.

    Both appeals involve different cases, but they are linked by the fact that the ATO is spending countless millions on the cases but will not raise any tax revenue from the legal expenditure.

    Rather, both cases are unprecedented power grab attempts and one is also about covering up a past ATO blunder.

    In the first power grab — the Carter case — the ATO wants the ability to attack family small and medium businesses that use discretionary trusts to structure their business affairs. These trusts dominate small and medium sized family businesses and have the “discretion” to distribute money/profits to beneficiaries (usually family members).

    Under law that has operated in Australia for countless decades the trusts are not required to distribute profits. Retained profits can be taxed in the trust.

    In addition, the potential beneficiaries do not have to accept any trust distribution.

    The ATO is seeking to tax trust beneficiaries where those beneficiaries have not actually received any money from the trust—-ie they will be taxing ordinary Australians on money they have not received.

    Natalie Carter is a mother with two school-aged children. The extended family runs a medium-sized land development business started by her grandfather. The business is structured as a discretionary trust and Natalie is a beneficiary. She does not participate in the operations of the business.

    In 2014, the ATO decided that, for tax purposes, Natalie was entitled to profits from the business/trust even though the trust did not transfer any money/profit to her. To make natters worse the ATO trust profit assessment ignored significant expenses such as interest, land tax, council rates and contributions—there was no actual profit to distribute.

    During the process of appealing to the Federal Court the ATO forced (garnisheed) Natalie and her family into paying the theoretical tax bills, which resulted in the forced sale of the family home. Not surprisingly the Federal Court applied the long-established law of the land and demanded the ATO pay Natalie’s costs.

    But with no whistleblower protection for taxpayers the blood lust in the ATO is rampant and it thinks it has discovered a loophole. No-one cares that it will create uncertainty for countless Australian businesses —the very people the government is helping with fast payments and an end to unfair contracts.

    The second case where the ATO wants the High Court to hear an appeal is, of course, the “gold case” where the ATO bankrupted almost the entire gold refining industry as part of its agenda, which is set out on The Australian web site under the heading “Dangers in tax office’s ‘gold case’ appeal to High Court”.

    As in the Carter case the full Federal Court debunked the ATO arguments and applied the law Australians understand, rather than looking for bizarre loopholes. Once again the ATO was forced to pay the costs.

    But the ATO still thinks there is a loophole in the law and wants the High Court to agree and so dramatically increase ATO powers beyond anything we have seen in the western world.

    In the “gold case”, among thousands of pages of evidence, there were two emails between people who were not parties to the case. The Administrative Appeals Tribunal did not cross-examine the parties to the case about these emails, but rather simply used them as key evidence to decide in the ATO’s favour.

    The full Federal Court took the view of most Australians and declared that given the group being sued by the ATO was “not a party to the emails, was not cross-examined on the documents and the documents were not the subject of any submissions by the parties, it constituted a denial of procedural fairness”.

    Effectively the ATO requires the High Court of Australia to declare such antics as “fair”.

    The High Court is our highest legal authority and it will determine the law. But in both these cases it is being asked by a government body to contradict the Federal Court and declare that the law allows what most Australians (including federal politicians) would regard as unfair practices.

  16. C.L. says:

    In The Australian.

  17. duncanm says:

    Rorschach
    #3738806, posted on January 27, 2021 at 2:23 pm
    The gross revenue was $4.8 billion, and the profit before tax was $134 million.

    What are the costs offsetting the revenues to get only $134M profit? Most of the real costs will be in maintaining and upgrading various servers [sunk costs – probably long amortised and probably not in Australia] and possibly staff [likely very few in Australia].

    do keep up.

    google Oz has about 1500 staff.

    That’s easily a couple of hundred million in staff expenses.

    As I said above – they’ll be paying a large amount to Alphabet for use of IP and software products.

  18. H B Bear says:

    Big Tech likes Big Government, except when it comes to paying for it. Then it prefers to rely on Big Accounting and Big Law.

  19. feelthebern says:

    they’ll be paying a large amount to Alphabet for use of IP and software products.

    That’s the cornerstone of the tech giants business model.
    The law can be changed pretty quickly.
    Licensing fees should be declared the year in advance for them to be deductible.
    Not at the end of the year.
    Could be done tomorrow via added regulation to the wheelbarrow full auditors already have to adhere to.
    But it won’t be.
    Because it’s all theatre.

  20. feelthebern says:

    Big tech licensing fees to the parent company (that are decided/quantified) towards the end of the tax year is similar to some of the larger mining companies.
    Example Glencore Australia in the past has paid interest rates as high as 17.5% to the international parent at time when Glencore Australia was selling debt into the Australian market at circa 3%.
    PS, the Glencore loan was only inked at the end of the reporting period.
    Again, this could be fixed tomorrow, allowing interest over a certain margin to not be deductible.
    You know, like what it is for Australian tax payers.
    But it won’t be.
    Because it’s all theatre.

  21. H B Bear says:

    feelthebern – nothing like sitting down at the end of the year to work out how much tax you are going to pay. Had a good year? Buy a Landcruiser Sahara. Poof. Instant asset write off. Free Landcruiser. Not for PAYG mugs though.

  22. feelthebern says:

    Bear, agree.
    But we humble plebs are not back dating agreements.
    That’s what the tech companies & global miners do every year.

  23. Chris M says:

    The gross revenue was $4.8 billion, and the profit before tax was $134 million.

    And all totally legit says Sinclair. They spent $4.6b in Australia on wages, servers, rent, electricity and lobbying. Easy to see how this could happen.

  24. vr says:

    Google’s tax strategy is called “Double Irish Dutch Sandwich”. Very effective in minimizing the tax it has to pay.

  25. feelthebern says:

    Double Irish Dutch Sandwich

    Used to be the core tax strategy.
    That strategy is still used in a smaller way, but more to validate/prolong the historical ruse.
    But no longer core.

  26. John A says:

    duncanm #3738786, posted on January 27, 2021, at 2:11 pm

    I always get the shits when politicians attack global companies like this.

    They comply with the law – if they don’t, then they should be prosecuted (rather than going after joe blow who deducted an extra $500 he shouldn’t have).

    If you feel they don’t pay enough tax in this country, then change the law.

    That’s exactly what the stupid government is doing, using the Willy Sutton methodology:

    Cops: Why do you rob banks?
    Sutton: Because that’s where the money is!

    Targetting big tech, big retail, big banks, big mining (is there any other kind?) with their “pay by the month” schemes.

    As many have already pointed out, it seems that the transfer pricing and anti-avoidance rules don’t seem to have made much of an impact in this case.

    I wonder if that represents a “don’t kill the goose that lays the golden egg” methodology?

  27. Adrian says:

    Google is the rent seeker. Google makes money of data and content paid for and produced by others.

  28. Epicurious says:

    Really, $4.8 billion in revenue, $4.666 billion expenses, net profit before tax of $134 million then pays $59 million in tax, so thats a net profit of 75 million, a profit to sales margin of 1.56%. Not a good business model UNLESS inter-company expenses are bled out of the 97% of sales to overseas affiliates in tax lenient precincts! Assuming a PER of 30 (reasonable at present US and Oz market rates) the Australian business would be ‘worth’ $A2,250 million. Who would want to run a business of value $A2.25 billion for a return of 75 million, surely any switched on corporate would be looking for better returns elsewhere UNLESS they do a BHP and shift profits offshore. Where are our so dumb politicians and so dumb advisors. Maybe they should Gargle a search of hyper-tax avoidance? In the meantime they are too busy chasing PAYG taxpayers and the businesses that actually pay them because it certainly ain’t Gargle. Gargle threatens to stop the use of its product in OZ so OK go ahead as it might help the braindead next generation to open their eyes and see what’s happening. Go on Gargle do it after all I’m sure your shareholders would appreciate an investment with better returns, ha!

  29. Rorschach says:

    Cops: Why do you rob banks?
    Sutton: Because that’s where the money is!

    Well by that logic, the Govt should tax or put a levy on any overseas paid license fees (i.e. income) generated in Australia! Assume the license fee was $4Bio – a 10% levy will be $400M and a “fair” 30% regime (i.e. income generated in Australis) would get $1.2Bio.

  30. feelthebern says:

    Rorschach, putting a pre-set metric around the licensing fees (lets be clear, these aren’t licensing fees), it would capture some of this.
    Again, this could be done by the government tomorrow via regulation.
    But they won’t.

  31. Pyrmonter says:

    @ Doomlord

    If only no-one had ever made that mistake before. Or, perhaps they have … (hoping Aston has a go at Bragg for this – it is egregious from someone who does know better)

    https://www.afr.com/rear-window/budget-2018-abcs-emma-alberici-fluffs-economics-101-again-20180513-h0zzr7

    @ CL – take Gottleibsen’s whingeing cum grano salis: as he presents it, you could have millions in unpaid present entitlement (an entitlement to be paid by a trust) appropriated to you, but be tax free, because you never ‘received’ it. Well, you won’t. It will be credited to your beneficiary loan account and you then draw against it. It’s smoke and mirrors, and often (not always, but often) associated with too-smart-by-half tax planning.

  32. yarpos says:

    You would sound more convincing if you spoke to the “massive” costs that Google incurs in operating in Australia and how this almost totally consumes their $4.8 Bill. Lets not kid ourselves about what Google is doing.

  33. Siegfried says:

    Just about every global corporation that operates in Australia does this profit shifting to some extent.
    The ATO is hamstrung by not having access to confidential product cost information housed at “head office” wherever that is.. usually a lower taxing country. Of course the “head office” country has no interest in co-operating with the ATO either ….. often due to government agreement with the corporation (eg: Ireland and others).
    Macron got fed up with this and proposed a tax on multi-national tech companies based on gross sales within country.. probably the only way a “fair” tax take could be made at present. This concept has already been implemented in Australia ages ago… with on-course bookies who have to pay an additional turn-over tax to government.. nothing to do with profit, as it would be unverifiable whatever they declared!! Have worked for multiple US based computer companies for over 20 years.

  34. feelthebern says:

    Don’t blame Google.
    Blame the lazy politicians who bring this shit up as a distraction.
    Don’t hate the player.
    Hate the game.

  35. theleftfootkick says:

    Often hear people complain that they ‘pay more than their fair share of tax’. Can any one please, define what paying your fair share of tax really is? As I understand things, one is only required to pay what is legally levied against you by the ATO; I don’t ever recall them mentioning anything about ‘fair share of tax”.

  36. Peter Greagg says:

    My view will probably not be popular around here.
    But the companies are just responding to the incentives they face.
    Australia could choose to be a low company tax state and then the overseas companies would try and recognise most of their profit in Australia.
    IMO, it is all about choices.
    Australia has chosen one of the highest corporate tax rates in the world, and so therefore companies try and minimise their profits in Australia.

  37. feelthebern says:

    Peter, you state the facts.

  38. Peter Greagg says:

    Not sure what you are asking FTB?

  39. feelthebern says:

    People can google this one if they want details.
    An Australian institution identifies a loop hole in the tax laws of an Asian nation.
    Implements strategy.
    Realises it has worked too well & they have generated a $A300mill return if they claim it.
    They decide to not claim it.
    They don’t want to get on the wrong side of Asian nation.
    Pure business.

  40. feelthebern says:

    Not asking anything.
    You said your views won’t be popular.
    My response was, you state the facts.
    That is, who cares if it isn’t popular.

  41. Rorschach says:

    The issue is also that modern tax laws need to be overhauled to bring them into the 21st Century. Whilst they may be perfectly adequate for financial transactions based on $dollars and cents, I doubt that there i much to manage payments / value exchanges via digital / blockchain or even how to accurately asses revenues raised not through sales but by IPOs or even go-fund-me! [We have people retiring as multi-squillionaires without ever having any taxable income!]

  42. Peter Greagg says:

    FTB
    Thanks.

  43. BM says:

    No taxation without misrepresentation.

  44. Siegfried says:

    The leftfootkick is correct.. companies are only required to pay what is legally required of them via the ATO tax rules… right now the ATO cannot reasonably determine if what the global companies are telling them is anywhere near correct.. so Australian Govt/ATO can only take two possible actions….

    1. Suck it up… and wear that these companies have a legal way to pay an effectively far lower rate of tax on their business profits generated in Australia, than fully Australian based companies Because the profit numbers are unverifiable.

    2. Change the law for multi-nationals to tax an entity (eg: Australian sales turn-over) that is verifiable by the ATO at an arbitrary rate determined by the Govt… yep sounds like a shit stick.

    A third possibility is to get all nations to agree to a multi-partisan information sharing database on each global companies financials… but hell might freeze over first! Meanwhile, the globals are raking it in….

  45. theleftfootkick says:

    Yes I think that one started a war somewhere in the 1700’s

  46. Kim says:

    Sinclair us being disingenuous. Alphabet’s gross profit margin globally in 2019 was 55.46%. It’s net margin fir the quarter last reported – September 2020 – was 24.36%.
    It would appear that the politician was perfectly right to query the data provided. Google staffing in Australia is virtually 100% sales.

  47. feelthebern says:

    The politician can pay the $A77 to ASIC for the comprehensive accounts.
    That has all the answers to the questions he was asking, without the showboating.

  48. Jock says:

    Many here are on the right path. The profit margin is rather thin. But having worked in energy with a number of american companies let me enlighten you. The yanks are actually risk averse. They like private rulings. It is inconceivable that the ato has not been through their books with a fine comb and that they have used consultants and international experts to verify claims. They would also have talked to other revenue services in the US and Europe. The key is to know where and how the excess profit is being skimmed. It surprises me that if we want to tax more we just need to deny some deductions. Or change the law. The problem is everyone is then impacted.

  49. mundi says:

    The question is: Were the expenses and revenue legitimate, or where they made up values to bleed away any profits. After all… Engineers writing software in the USA can charge Google Australia…. practically anything. Why not charge them an amount to make them almost completely run at break even?

  50. Rorschach says:

    The problem is everyone is then impacted.

    The Government had no qualms on introducing a 0.06% levy on deposits for JUST the Big Banks (specifically Commonwealth Bank, ANZ Bank, Westpac, National Australia Bank and Macquarie Bank). What’s preventing them from similarly applying just to the major Big Techs (i.e. specifically just to Google Facebook Twitter etc)?

    https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/BudgetReview201718/Banks

  51. Arky says:

    Once again libertarians mount their white horses and go into battle on some academic principle on behalf of a pack of utter mongrels who wouldn’t give libertarians the steam off their shit.

  52. HGS says:

    Peter Greagg said at 4.26

    How about the Fed Gov reduces tax. Say, flat 10% corp and income tax. It will still be imperfect. but I suspect much better.

    But, the next decade is about getting ever more revenue to the Government, so we will probably increase taxation.

  53. Tom says:

    Once again libertarians mount their white horses and go into battle on some academic principle on behalf of a pack of utter mongrels who wouldn’t give libertarians the steam off their shit.

    Correct.

    Modern libertarianism couldn’t give a fuck about liberty, just dinner party invitations from their friends in the Marxist left.

  54. rickw says:

    The answer to Australia for any sensible multinational is to not have a presence here.

    USD $60 million to get asked questions by a jackass isn’t worth it.

  55. NoFixedAddress says:

    A good article Sinclair highlighting the theater and misdirection surrounding the justification for introducing this bill.

    And as different posters have mentioned there is a swag of existing law and regulation surrounding transfer pricing.

    After all the ATO have been on the go since 1910 so they have surely sorted how to deal with overseas companies since then.

    What more interests me is the mechanism of the proposed law which will be administered by Australian Communications and Media Authority

    You can download the explanatory memorandum/memoranda here https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fems%2Fr6652_ems_2fe103c0-0f60-480b-b878-1c8e96cf51d2%22;rec=0

    PS Will their ABC share in the bounty?

  56. NoFixedAddress says:

    And Sinclair if I may.

    To put the $4.8billion in some sort of context you would need to access the latest PwC Online Advertising Expenditure Report.

    Brief mentions of the content of those reports came up here,

    https://iabaustralia.com.au/news/pwc-online-advertising-expenditure-report-finds-australian-digital-advertising-market-worth-8-8b-in-2018/

    and

    https://iabaustralia.com.au/resource/ad-spend-report-march-2020/

  57. BrettW says:

    Have to disagree with Sinc’s attitude towards Google and presumably FB and Amazon etc. These companies who sell advertising are doing so at the expense of more traditional advertising forms such as newspapers, magazines, radio, TV, etc. Many of which are Australian businesses that needed the ad revenue to survive. That affects local jobs and tax revenue whereas the overseas IT companies direct the “profit” in the form of “licensing fees” to offshore tax havens with little contribution to the local economy.

    I guess no problem for the Googles, Amazons and FB’s to continually grow at the expense of the small guys.
    Wasn’t it Twitter that removed NY Post for two weeks for publishing true story about a laptop and FB changed its algorithms to ensure story not widely circulated.

    Meanwhile companies like Twitter lecture us about Always Was Always Will be Aboriginal land (see Michael Smith News). IT companies allow nasty dictators to have accounts but shut down the President of the country in which they started their business.

    Sorry Sinc, but as others have pointed out your support of Google does not reflect what is going on.

  58. David says:

    Based on these numbers Google has an EBITDA margin in Australia commensurate with Coles and Woolworths. Is that credible for a mature internet / technology company? The Australian subsidiary’s performance is also massively poorer than then parent. Seems like Google should be sacking the local management or shutting the Australian business. The latter would allow them to redeploy their scarce resources to a much higher margin business. Why aren’t shareholders screaming for this?

  59. Albatross says:

    Bruce of Newcastle
    #3738787, posted on January 27, 2021 at 2:12 pm

    Best post. Fuck everyone involved.

  60. 2dogs says:

    I think the implication here is that to have so little profit on such a large amount of revenue suggests avoidance of tax by international transfer pricing.

    Given that Google is an effective monopoly, it would not be expected to have tight margins.

  61. MACK says:

    DuckDuckGo gives pretty good search results, without the tracking. https://duckduckgo.com/ “Our privacy policy is simple: we don’t collect or share any of your personal information.”

  62. Macspee says:

    Let ‘s hear it for the cost of goods sold. Some wanna be taxmen out there searching for gold at the end of the rainbow.

  63. Bruce of Newcastle
    #3738787, posted on January 27, 2021 at 2:12 pm

    Spot on!

  64. Siltstone says:

    Kim #3738998, posted on January 27, 2021 at 5:09 pm
    Sinclair us being disingenuous. Alphabet’s gross profit margin globally in 2019 was 55.46%. It’s net margin fir the quarter last reported – September 2020 – was 24.36%.

    David #3739189, posted on January 27, 2021 at 7:02 pm
    Based on these numbers Google has an EBITDA margin in Australia commensurate with Coles and Woolworths. Is that credible for a mature internet / technology company? The Australian subsidiary’s performance is also massively poorer than then parent.

    Kim and David have it right. Maybe Sinc can explain to us why Google would do business here with such apparently poor returns.

  65. L.B.Loveday says:

    Siegfried
    #3738942, posted on January 27, 2021 at 4:10 pm
    … on-course bookies who have to pay an additional turn-over tax to government.. nothing to do with profit, as it would be unverifiable whatever they declared!
    ********
    The turnover tax is effectively paid by punters (no punters, no turnover, no tax) just as surely as the GST is paid by purchasers, not sellers.
    .
    The turnover tax results in higher market percentages in the bookmakers’ offerings, so a lesser return to punters.
    .
    Have been a punter for over 20 years.

  66. Dot says:

    Tom
    #3739101, posted on January 27, 2021 at 6:15 pm
    Once again libertarians mount their white horses and go into battle on some academic principle on behalf of a pack of utter mongrels who wouldn’t give libertarians the steam off their shit.

    Correct.

    Modern libertarianism couldn’t give a fuck about liberty, just dinner party invitations from their friends in the Marxist left.

    No, you senile old boomers can get fucked.

    Taxation is theft.
    Australia’s working class pay an exorbitant EMTR if they try to a. live and b. better themselves.
    Google, Clapper, Brennan, Bragg and other soy turds like Dnnnissss Richardson want to put me on prison as a terrorist because my political point of view is literally “please leave me alone, I wish no harm to others” because I disavow their graft, thievery or moralising bullshit.

    Scum, the lot of you. I hope there is an afterlife and you all pay very dearly, a second death on the lake of fire, mercy and no eternal suffering.

  67. Siltstone says:

    The Australian Gov (“representing” us) cannot afford the legal bills to challenge the international transfer pricing. Because of scale and degree of difficulty. Gross annual Aust Gov income circa $US385Billion/yr. Alphabet gross annual revenue circa $US 185Billion/yr (ie circa 50%). Much easier for ATO to pick smaller targets.

  68. Bad Samaritan says:

    The ATO reckons about 90% of individual taxpayers get professional help to prepare their tax returns, and that some 90% of them get a refund.

    Ok, So the huge majority of people whinging about companies etc legally minimizing their tax liabilities, are also paying to legally minimize their own: do not care to pay a penny more than they have to: do not regard what they have already paid or “should” pay, as fair. It’s too much and they want some (or all) back.

    Since this is how almost everybody acts I have no idea why Google is supposed to act differently. Can some leftist help me out with this?

  69. Mother Lode says:

    I don’t see the problem with the profit. Most of the expense of providing service in Australia is overseas where they pay tax on it. Very little of the value is added is from Australa.

    If you buy a Mercedes in Australia the money made by the sales yard as profit is a tiny fraction of what you paid.

    If they managing to minimise profits in Australia legally then the government has no business telling they shouldn’t do it.

    But the simple fact lost on our insular and provincial-minded government is that Australia’s tax regime is in a competitive international field. All nations are competing for business revenue. Australia just happens to be very bad at it because the people in charge of it are short-sighted and cupidinous whose idea of increasing tax revenue is to increase taxes.

    And Bragg is playing a cynical game that will only work as long as Australians are kept ignorant of how things work and why things are set up as they are. He wants us to be provincial as well so we don’t compare our situation to the outside world.

  70. Mother Lode says:

    If they managing to minimise profits in Australia legally

    If Gulag manages to minimise profits in Australia legally…

  71. RJH says:

    Weren’t Bragg & Hughes parachuted into the top NSW Senate positions at the 2019 Election over Jim Molan by the manipulations of the Green Left Photis faction of the NSW Liberal Party? And what have they had to offer Australian electors other than exhibiting the charisma & intelligence of a retarded brown paper bag! Is this really the best that Morrison & his leadership/lackeys can offer the Australian electorate? God help us!

  72. yarpos says:

    Google is clearly it looks like Google is rorting transfer pricing with its claims of billions in fees with itself.

    Google is operating ethically , as opposed to legally, it would simple to calculate a fee per transaction based on overall infrastructure and support required for Australia. The would then be able to substantiate claims or better defend attacks. A bit too much transparency perhaps.

    The Feds do check transfer pricing operations for legitimacy, but given general public service incompetence (especially around all things IT) and dealing with a powerful and arrogant monolith like Google , I doubt they do much except thank Google for their reports.

  73. Tel says:

    Google staffing in Australia is virtually 100% sales.

    How do you know that? They advertise for Australian engineers all the time.

    https://au.indeed.com/jobs?q=Google

    Only a few of those are even sales related.

  74. Dot says:

    Jim Molan would be saying the same stupid shit, what a disappointment.

Comments are closed.