Labor have no answers.
Now that I’m an Independent Senator I can finally ask questions in Question time. (The Liberal party never allowed myself or Alex Antic to ask questions.)
If the Australian government wants to repay the massive debt it has, it needs to stop profits from going offshore.
One way to tell if Australia is being ripped off is to look at the operating profit ratio declared by a multinational in Australia verses what it’s worldwide operating profit is.
Pfizer, in 2022 for example, had an operating profit ratio of just 7% in Australia v a worldwide operating profit ratio of 35%.
This is clear evidence that Australia is allowing Pfizer to shift profits offshore that are breaching the arms length transfer pricing rules.
The ATO should take a closer look at this. The other issue that needs to be addressed when it comes to multinational tax avoidance are withholding tax rates.
The withholding tax on royalties paid to Ireland is 10% which added to the company tax rate of 12.5% means the total tax on profits sent to Ireland is 22.5%, 7.5% less than the tax on profits been retained in Australia.
Given a billion dollars was transferred to Ireland this is a lazy $75 million that Pfizer can avoid in tax just through a few accounting entries.
The easiest way to stop profits going offshore is to lift withholding taxes so that it costs more to shift the profits offshore than retain the profits in Australia.
I’ve attached the withholding tax rates below in the link. As you can see Australia is not charging enough withholding tax on royalties.
Only the www.peoplefirstparty.au has the skill set to actually reform Australia’s tax system. Please register your support.
Senate on 18/09/2024
Questions Without Notice
Taxation
Senator RENNICK (Queensland) (14:51): My question is to the Minister representing the Treasurer, Senator Gallagher. In 2022, Pfizer derived $1.4 billion in sales in Australia and an operating profit of $90 million, a ratio of just seven per cent. This is despite Pfizer earning $100 billion in worldwide sales and an operating profit of $35 billion, a ratio of 35 per cent. Pfizer Australia’s intercompany assets show a loan balance with Pfizer Ireland of over a billion dollars. Australia imposes a 10 per cent withholding tax on royalties paid to Ireland, which, added to Ireland’s company tax rate of 12½ per cent, means that at a total of 22½ per cent there is a lower rate of tax on profits sent offshore than profits retained in Australia. Will the Albanese government lift withholding taxes to stop profit-shifting by foreign multinationals?
Senator GALLAGHER (Australian Capital Territory—Minister for the Public Service, Minister for Finance, Minister for Women, Manager of Government Business in the Senate and Vice-President of the Executive Council) (14:52): I thank Senator Rennick for the question. I think we’ve been clear about the tax arrangements that we’ve put in place to address multinational tax and some of the changes that this parliament has proposed. As I’ve said a number of times, in terms of our tax reform agenda we’ve dealt with the revised income tax arrangements, which gave every taxpayer in the country a tax cut and in a fairer and better way. We have also got our super tax legislation that is before this parliament that we would like for those high-balance super accounts. And we have moved some legislation—in fact, this year, the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Bill passed the parliament, which limited interest deductions for multinationals and improved corporate disclosures on subsidiaries, delivering on key parts of the October budget’s multinational tax integrity package. So that is what the government have announced; that’s what we’ve done. We don’t have plans as outlined by Senator Rennick.
