'Taxpayers sabotaged': Companies not paying tax despite receiving $6 billion in government contracts
Multinational companies winning taxpayer-funded contracts worth hundreds of millions of dollars are not paying tax, a Fairfax Media investigation of Tax Office and tender data has revealed.
Computer giant IBM, software company SAP and military arsenal provider Northrop Grumman are among those paying little or no tax in Australia, while scoring hundreds of government contracts.
A Fairfax Media analysis of 20 of the largest tender-winning companies over the past decade has found taxpayers shelled out $6 billion for services ranging from tank maintenance to software.
But those top 20 companies paid only a combined $42 million in tax in the last financial year, Tax Office data shows, meaning Australia may have missed out on as much as $264 million in tax if the companies paid the average rate of 30 per cent.
Australian business leaders have accused the Turnbull government of fostering an "unconscionable situation" and "sabotaging the taxpayer".
Fairfax Media can reveal Coalition senator Barry O'Sullivan first raised concerns with former treasurer Joe Hockey more than three years ago, but despite the 2015 recommendations of a Senate inquiry, little direct action has been taken by the government.
The federal government's Black Economy Taskforce interim report, released on budget night, urged the government to "take the lead" and limit tender opportunities to companies that have a good tax record.
In documents recently released under freedom of information, Finance Minister Mathias Cormann previously said assessing a company's tax rate for tenders was impractical and warned that discriminating against foreign companies would be a breach of free trade obligations.
"This would demand very specific expertise and impose significant compliance costs for businesses as well as the Commonwealth," he said in 2016.
Bureau of Statistics figures show that in 2014-15, $52 billion of the $59 billion awarded in tenders were attached to an Australian address.
Many, such as airplane titan Boeing, which has taken out 232 tenders over the past decade, operate from an Australian address while being owned by their US based parent company. A spokesman said Boeing paid taxes in Australia in accordance with relevant laws and requirements.
"Boeing paid its tax for that fiscal year in previous years and then applied tax losses combined with a small R&D tax credit," he said.
It is understood Senator O'Sullivan was particularly concerned about the increasingly uneven playing field in IT contracts, a problem that has emerged as more government services move online.
IBM has a $1 billion contract to overhaul computing at the Department of Human Services but has failed to sign on to the government's tax transparency reforms. It has won 178 tenders in the past decade but paid 0 per cent tax last year.
A confidential ministerial brief for Financial Services Minister Kelly O'Dwyer states the measures in the government's tax integrity package and the Multinational Anti Avoidance Law would ensure that activity taking place in Australia is taxed in Australia.
But neither it nor the recently released procurement rules from the Department of Finance include a provision for withholding government contracts from companies not paying tax; rather suppliers are asked to "provide an economic benefit" through paying tax in Australia.
Labor has adopted the 2015 Senate inquiry recommendation that tenderers be forced to state their country of tax.
"Disclosure isn't discrimination," said Labor's shadow assistant treasurer Andrew Leigh. "You see the analogy with Plutus payroll [which allegedly defrauded $165 million from the tax office] – good companies which have been working for many decades missed out on government tenders because their model involved paying tax."
http://www.smh.com.au/federal-polit...-in-government-contracts-20170516-gw5oga.html
Surely a sovereign government can stipulate in a tender document that xyz percent of tax will be paid in Australia?
IMHO cormman is an Australian economic saboteur .
Raider
