Tech giants claiming as little as 5 per cent of their revenue is taxable

Some of the world’s biggest tech companies report as little as 5 per cent of their total Australian revenue is taxable, as Assistant Treasurer Stephen Jones says the government will hold large multinationals to account on their tax obligations.

Apple, Google, Facebook and Microsoft earn billions of dollars a year in Australia, and Jones said he expected multinationals to “pay their fair share” of corporate income tax.

The Australian tax receipts for Microsoft, Apple, Facebook and Google vary markedly.Credit: Bethany Rae

“We have legislation in the Senate that will hold large multinationals, and the tax agents that advise them, to account for meeting their tax obligations,” he said.

Google has reported Australian revenue of $9.4 billion since the Australian Taxation Office’s tax transparency reporting started in 2013-14. Of that, 18.7 per cent, $1.8 billion, was taxable and it paid $384 million in corporate income tax.

On average over the past nine years, Google Australia has paid 21.8 per cent of its taxable income as income tax.

It’s the better performing of the tech giants in Australia.

Microsoft and Microsoft Datacenter reported a total income of $28 billion over the same period and a taxable income of $2.3 billion, which is 8.1 per cent of its total income. Of that taxable income, $673 million, or 29.4 per cent, was paid in income tax.

Apple reported the largest total income of the tech titans, bringing in $79.5 billion in total revenue over the past nine years, the ATO data shows. It also paid the full income tax rate on its taxable income, but reported that just $3.7 billion of that income – or 4.7 per cent of its total income – was taxable.

Facebook Australia has reported earning income in Australia only since 2016-2017, after the Multinational Anti-Avoidance Law aimed at ensuring multinational companies pay their fair share of tax came into effect on January 1, 2016.

Since then, Facebook Australia has paid the full 30 per cent income tax rate. The company has brought in $3.9 billion since that time, but reported that less than 10 per cent of that income, $361 million, was taxable.

Lucinda Longcroft, Google’s director of government affairs and public policy for Australia and New Zealand, said that in 2022 Google Australia made a pre-tax profit of $366 million, which resulted in an income tax bill of $122 million – triple the income tax paid by Google in 2017.

Longcroft said the company had also invested more than $1 billion in its Australian operations in 2022.

“We have been deeply committed to Australia for the last 22 years, and continue to work with local partners to implement our digital future initiative, a $1 billion five-year project that’s building capabilities in Australian technology, infrastructure, research and partnerships,” she said.

That digital future initiative has been invested in projects that include work with the CSIRO and other organisations to conserve Tasmania’s giant kelp, and a project with Cochlear, Macquarie University Hearing and others to explore how artificial intelligence can be used to help fix issues in hearing technology.

These programs also allow Google to claim the research and development tax offset, which is part of the reason why tax as a proportion of its taxable income is not always the full 30 per cent rate.

Google is also the only multinational tech company to have signed the voluntary Tax Transparency Code, and has published annual tax reports as part of its voluntary agreement.

A Microsoft spokesperson said: “Microsoft is fully compliant with all local laws and regulations in every country in which we operate.”

Apple declined to comment, and Facebook did not respond to a request for comment.

Jones said he was concerned about the lack of transparency from digital platforms.

“Transparency is an important market and social responsibility of any corporation, including digital platforms,” he said.

“We’re seeing scammers using platforms like Facebook to go after people’s money, and Meta can and should be doing much more to fight scammers.”

The federal government has two bills before the Senate that aim to force more transparency and responsibility on these large companies, particularly after it was uncovered last year that consulting firm PwC advised clients including Facebook on multinational tax avoidance laws.

The Treasury Laws Amendment (Making Multinationals Pay their Fair Share – Integrity and Transparency) Bill is aimed at making multinationals accountable for their tax structures.

The Treasury Laws Amendment (Tax Accountability and Fairness) includes changes and increases to penalties for tax advisers who promote tax avoidance to their clients. The Treasury will release consultation papers later this year on tax fraud and promoter penalty laws in response to the PwC tax avoidance scandal.

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