Apple Australia insists it pays all its taxes


news US technology juggernaut Apple has insisted that it pays all of its local taxes, despite the company having filed financial results this week that saw the company pay extra taxes of just $4.5 million last year off an extra $1.8 billion in local revenue.

Earlier this week Apple sent its annual financial results document to the Australian Securities and Investments Commission. The document can be downloaded in PDF format here.

In the document, Apple reveals a remarkable set of figures about how its Australian operation has fared over the past 12 months. The company’s total revenue from its Australian operation rose by 29.5 percent in that period. The jump means that Apple made an extra $1.8 billion in its 2015 financial year compared with its 2014 financial year, with the company pulling in a total of $7.8 billion over the period from Australian customers.


However, despite the huge gain in its revenue in 2015, Apple’s Australian financial results reveal it only paid an extra $4.5 million of corporate income tax expense in the period, making a total of $84.9 million, compared with $80.3 million the previous year, when it made $1.8 billion less revenue. The company also claimed that it made $44 million less Australian profit than it did the previous year, for a total of just $208 million.

Apple’s 2015 Australian financial results were audited by Ernst & Young.

Delimiter invited Apple Australia to comment on how it could account for the fact that it paid only a small amount of extra taxes in 2015 off reduced profits, despite making an extra $1.8 billion in revenue.

In addition, Delimiter invited Apple to comment on why its claimed profit margins in Australia appear to be significantly less than the margins it discloses globally, as well as whether the company believes it is currently complying with Australian taxation law.

Finally, Delimiter also invited Apple to comment on whether the company believed it was contributing to Australia’s tax income in a fair and proportionate manner.

in response, Apple sent just a single statement, saying: “Apple Australia pays all taxes it owes in accordance with Australian law.”

The news comes as it has recently been revealed that the Australian Taxation Office is currently auditing Apple’s 2012 financial results for compliance with Australian taxation law. The company has been forced into paying €318 million to the country of Italy to settle a tax dispute, and is under pressure on the issue in a number of jurisdictions globally.

Apple Australia managing director Tony King told the Senate’s inquiry into corporate tax avoidance in April 2015 that the company complies with Australian tax laws.

“Apple Australia pays all taxes it owes in accordance with Australian law,” he said. “Apple’s product design, development and manufacturing all take place outside of Australia. All of the sales from our operations are included in Apple Australia’s accounts. Apple Australia buys the products we sell here and we pay Australian tax on the profit on these sales. We also pay GST on every single sale in addition to corporate, payroll and fringe benefits tax. In fact, in our most recently lodged accounts our effective tax rate was above the Australian corporate tax rate of 30 per cent.”

King said Apple was “committed to Australia’s economy and its success”.

“We are transparent and open with the Australian tax office and have worked through its advance pricing agreement program since its inception to determine how to confirm the prices on the products we buy from affiliates outside of Australia,” King said.

“Just as countless other Australian taxpayers have, Apple Australia sought these agreements as part of a formal and globally recognised program to assure certainty on compliance with all relevant Australian laws. These agreements are reviewed regularly in line with normal tax office procedures to ensure Apple Australia is in compliance with all of its Australian tax obligations. The ATO has confirmed on a number of occasions that we have a cooperative relationship and we remain willing to enter into further agreements in line with normal business practice here in Australia.”

Not a huge surprise that Apple is not commenting on this situation or explaining any of the glaring discrepancies in its Australian financial results. The company — like others such as Google — will not change its habits until the law changes. Is that fair enough? Well, yes. Corporations’ first duty is to maximise their shareholders’ financial interests.

However, to my mind I would also like to see Apple — one of the largest corporations in the world — participating a little more strongly in the national and international discussion about how corporate taxation can be changed to better reflect the concept that taxation should be applied where profits are earned.

A response of “nothing to see here” is a little rich when a company is milking Australians for billions of dollars of revenue each year and paying very little corporate tax on that income.

Image credit: Apple, Dylan327


  1. “…Apple Australia insists it pays all its taxes…”

    No doubt they do…they’re seemingly just not obliged to pay much…which is the problem…

    • Nailed it!

      We need legislation that prevents companies from selling their own products to their local subsidiaries (themselves) at sky high prices to minimise local profits. I’ve no idea how that would work but it needs to be looked at.

      • Yep. Did you guys look at the list of companies that paid tax. What got me was the levels of taxable income on some of them.

        Some companies had 0 taxable income, which is insane. Others had taxable but didn’t have to pay it, because they wrote it off against previous losses etc (which makes some sense).

        • The thing that annoy’s me the most is when companies make expensive internal loans to their subsidiaries to soak up all the profits and avoid tax – sometimes they do this to make a loss and get a bloody refund!!!

          • @do transfer pricing legislation already exists. As do reasonable international borrowing charges.

            Tax losses aren’t refunded, but can be carried forward.

          • @do transfer pricing legislation already exists. As do restrictions on foreign interest charged.

            Tax losses aren’t refunded, but can be carried forward (restrictions apply).

          • I’m clearly not a tax expert.

            Explain to me how news corpse got a 900 million cheque from the ATO, wasn’t that due to internal loans and internal funny money transfers?

      • Slight drama. The rules are already there and ironically are a large part of the problem.

        There are rules called Transfer Pricing, which in a nutshell say a company cant sell to subsidiaries at a price outside the market value. The rules are there for good reason, it was just never imagined that what they aimed to stop (transfer profits out of third world economies) actually worked in reverse as well.

        The main thing people dont get is that these companies are global, so do things on a massive scale. So business practices that streamline those global issues (manufacturing, distribution, advertising, etc) will all be done in the one place.

        Its through that they siphon profits, because there is a pretty natural markup between the manufacturer, and the vendor, which happens with everything – importers need to make a profit as well.

        Something else to consider. Of that $7b turnover, people dont realise that about half of that is already taxed in China where all the products are made.

  2. I wonder if its because of the Danish Sandwich (or whatever the thing is called), where there are these pesky organisations set up the company in countries with (coincidentally) low or zero taxes that provide loans to the local company at high interest rates thus allowing the interest expense to offset income? All legal. Just like sourcing components for your products from countries that have no child labour laws…

    • Greatest version of this I’ve heard bit a certain mining company in the ass when they wanted to extend their operation. Their parent was billing the mine well of market for transport of the ore, meaning the mine was running at the loss, while the overall business was a making a big profit in transport. The mines paid royalties based on profits so in effect paid no royalties. Mine is closing(and all those transport profits disappearing) because every attempt to extend the lease or expand operation is being rejected due to the lack of royalties paid to the local indigenous community over the term of the lease.

  3. Isn’t part of the problem that they buy their products from themselves in a tax safe haven at a much higher price, thus reducing their “profit” within Australia?

    Not sure much can really be done to stop that from Australia.

  4. Hmmm….The current political speak (LNP) is that corporate tax needs to be reduced…. Ho Hum….This is agreed upon, Government sanctioned Tax avoidance (Tax laws made/formed) to allow it to happen. Available to and used by every corporation/business. But…if the TPP is good for Australia, this tax debacle will never be reformed/addressed. A transaction tax on movement of monies into and out of Australia may be a effective way of getting “appropriate Corporate” taxation (tax the cash flow).

  5. The changes to tax law would be significant. Australian companies (like individuals) pay tax on their taxable income, not revenue. For revenue you might like to ask the the amount of GST collected by Apple. Then add payroll tax.

    The margin of the parent isn’t relevant either, most value add conducted in this entity. Australia is just a retail and marketing arm.

    Transfer pricing is illegal in Australia. If the ATO believes Apple is engaging in such practices they should investigate.

    However not paying enough tax when using revenue shows a lack of understanding of Australian tax law. .

    • Richard no one is saying Apple are breaking the law, we are saying the law needs to be changed. Saying look at the other taxes Apple doesn’t do anything about the problem. Like is often the case you have missed the point yet again. We have Australian companies moving overseas because of the advantages allow them to compete more effectively even if they are still largely operating in the Australian market. We have taxes in place that are bad for economic activity to make up the short fall.

      You have listed some the worst taxes in your hey look of there example. Payroll tax is bad it discourages small business from expanding to level where they have enough staff to start paying payroll tax off shoring staff or contracting out work. GST is almost as bad as it reduces the amount of available money cycling through the economy producing economic activity. The best places to chase tax revenue without hurting our local economy is going after profit heading off shore or money just accumulating(some would say stagnating) in the hands of a few.

      The whole tax system needs to be simplified to more effective at what it is designed to achieve. This is what a Liberal government apparently stand for but there actions say otherwise, with interference and tax exemptions across a range of industries.

      • @m again you miss the point. Income tax is applied to taxable income, it is the basis of our tax system. Australia doesn’t have a revenue tax (very few do) as it would be a bad idea : doesn’t take into account the cost of business. It’ll push even more business offshore.

        You point re business moving overseas whilst largely operation in Australia is also incorrect. We move businesses overseas for foreign income, Australian source income is covered by the tax system.

        Ah tax the rich position, oblivious to those paying the fewest tax and the greatest ability to relocate wrath offshore.

        A basic understanding of the tax system in Australia would help the discussion. No party in Australia is proposing anything but increasing tax to pay for the wasteful expenditure.

      • Apple may well be breaking the law in regards to transfer pricing – it just hasn’t been tested yet as the ATO haven’t bothered to press suit and have cosy relationships with major corporations. Then again they also don’t have the legal nor intellectual firepower and staff numbers to challenge well resourced opponents so they tend to go for ‘low hanging fruit’.
        However this is beginning to happen in Europe and Apple are losing cases and being hit for back taxes and penalties.
        Currently there’s no political will (witness the LNP killing off all the previous government’s investigations in this area) but that will eventually change. Especially if the Greens continue to gain a degree of prominence in Australian politics as they don’t seem terribly amenable to ‘business as usual’ shenanigans unlike the current major parties.

        Unusual to find myself agreeing with Richard – he’s correct on the transfer pricing issue ;-)

        Also closing these obvious loopholes should be fairly simple but the government uses the big consulting firms to write and implement these laws who completely coincidentally sell techniques to avoid them as services to their corporate customers. Conflict of interest never seems to apply to consulting companies…

        • Exactly right!

          The laws are already there, the ATO just needs to test Apple on them.

    • What will Turnbull do about transfer pricing. DO, not say, those two never really seem to align when it comes to Turnbull. Goldman Sachs was one of the companies coming up with schemes for companies to minimise tax through transfer pricing and were investigated because of it.

      • @d tax minimalisation is perfectly legal. Transfer pricing is not.

        It is not up to Turnbull to enforce transfer pricing but the ATO.

        • Actually Richard, you obviously have no idea what you are talking about, transfer pricing is perfectly legal. All prices charged by and overseas division selling to another country is transfer pricing. The trouble is whether this transfer pricing is a fair price or not. If set excessive high for tax minimisation purposes.
          Transfer pricing is meant to represent what the company would pay an independent supplier for the same product.
          The mention of Turnbull was because of his being managing director of Goldman Sachs. Goldman Sachs advises companies on what transfer pricing they can justify charging and ways to maximise that price and produce evidence for that pricing. They got into trouble for recommending excessive transfer prices and were investigated.

          • @d @gg you’re correct I should have said transfer pricing benefit.

            Again it is up to the ATO to enforce, legislation already available. Multinationals like Apple are well aware of their tax obligations.

          • All good Richard. I commonly use an iPad as my example, mostly because I know the numbers for the most part. Couple of guesses in the middle, but it tells the story well enough.

            $800 on the shelf, it probably costs $400 for Apple to initially get their hands on it. That $400 is a guess, but it wont be far off.

            So they sell to themselves for $600 (another educated guess), which is the transfer price. And as its a reasonable price, there is no transfer pricing benefit. Hence, no laws are being broken.

            Its not Apple’s fault the admin costs are comparatively low for the distribution leg, and that the profits then fall into other tax regimes and their own loopholes. Which is the fault of those Governments, not Apple.

            The problem here is that for multinationals, there is a valid business sense to centralising certain parts of their global empire to cut costs, and distribution is one of those. Mainly because every markets product gets made in the same place.

  6. They are paying 1.2% of their gross take, as tax.
    That means they are claiming their EBIT is less than 4%?
    That doesn’t match their overall profitability. The only assumption you can make therefore, is that they are under-representing the true revenue they derive from the AU market.

    By screwing their AU “subsidiary”, with onerous payments going somewhere between Ireland and the Netherlands, they screw their Australian customers out of any flow on tax take going to the government.

  7. It suits the politicians to leave holes in the system so they can be seen to attract investment. It also suits politicians to cry poor so they don’t need to provide services that don’t help their constituency (or help the folk who won’t vote for them anyway).

    Without disclosing its hand about cuts it has subsequently imposed (in fact, while promising those cuts would not happen), the current government chose to bride the electorate with the abolition of a tax which was raising valuable revenue.

    Now it is casting around to ensure that whoever pick up the tab and however shrill the demands, it won’t be its mates.

    To the extent Apple is a company directed to provide consumers’ needs at least the not insubstantial GST it harvests is not claimed back.

  8. Unless there is some globally adopted tax regulation requiring all companies to normalise EBIT margins across jurisdictions, this will be impossible to eliminate.

    Good luck trying to get everyone to play ball.

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