Capitalism allows multinationals to defy local tax laws.
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Some of the biggest local and foreign companies in Australia are telling the Australian people, through the Tax Office, to rack off. They’re not paying tax here and are determined to keep it that way.
Revenue that could be subsidising health care, paying for the Gonski school funding reforms and alleviating the tax burden carried by you and me, is being stolen by foreign and local capitalists.
Last month the Australian Taxation Office revealed that 579 of the country’s largest corporations paid no tax in 2014. They comprise 38% of the 1539 largest local and foreign companies operating in Australia.
To make it onto the list of largest local and foreign companies operating in Australia required sales in excess of $100 million in 2014.
Reflecting the control of the economy by imperialism, only 554 local companies were on the list, while 985, or nearly twice as many, were foreign-owned.
Multinationals to flout country-by-country disclosure requirements
Now, tax “advisers” to the big corporations are simply telling the Australian Tax Office (ATO) that they will ignore new requirements to report country-by-country (CbC) financial information that would reveal their transfer-pricing arrangements.
Transfer-pricing is the arrangement whereby one part of a multinational corporation charges another for the sale of products, the provision of services, financial transfers and use of assets. If the subsidiary or head office is based in a low tax country it can effectively transfer a major part of the profits generated in a higher tax country to the lower and avoid paying the higher rate of tax.
A consistent set of country-by-country disclosure requirements was adopted by the OECD as governments in advanced capitalist countries faced rapidly mounting debt crises and were placed under political pressure to make the rich pay what they were legally obliged to pay by way of taxation in the country where profits were made.
In the Australian context, CbC reporting would mean that a company would have to inform the ATO of the name of each country in which it operates; the names of all its companies trading in each country in which it operates; and what its financial performance is in every country in which it operates, without exception, including: sales, both third party and with other group companies; purchases, split between third parties and intra-group transactions; labour costs and employee numbers; financing costs split between those paid to third parties and to other group members; and its pre-tax profit, amongst other things.
Tax insiders are predicting that as many as 25% of the biggest multinationals will simply refuse the CbC disclosure requirements.
And why wouldn’t they? The current penalty is a slap on the corporate wrist with the breast feather of a chicken, a penalty of between $2000 and $3000.
Not only that, but the Taxation Commissioner has the power to exempt companies from CbC reporting entirely at its own discretion.
No wonder the tax “advisers” to the multinationals are demanding that the government exempt multinationals “where appropriate” to “reduce red tape”.
It would make more sense for more of our low and medium income earners to be exempted from the “red tape” of tax returns, but then ordinary Australians don’t have tax “advisers’ with access to the ears of government.
As the rich rort the system, the rest face reductions in services, increases in costs of living and a jump in the GST.
Truly, imperialism can rack off. We need state power to be in our hands, not theirs. Until we have independence and socialism, capitalism will continue to fleece the people and dress the rich in gold.
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