How much tax does Australia miss out from ASX200 companies?

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How much tax does Australia miss out from ASX200 companies?

A tax justice report has revealed what rate of company tax the biggest publicly listed technology firms in Australia have paid over a decade.

The findings were handed down by lobby groups Tax Justice Network Australia and United Voice in an assessment of ASX200 companies for the 10-year period between 2004 and 2013. Companies with less than three years of data were excluded, leaving 192 firms to be scrutinised in the report entitled "Who pays for our Common Wealth? Tax Practices of the ASX200" [pdf].

The report claimed that Optus has effectively paid a 9 percent corporate tax rate in Australia, saving over $713 million per annum over a 10-year period when judged against the full 30 percent statutory rate.

Although more than 14 percent of the companies paid zero percent tax, Optus' parent entity Singapore Telecommunications' saving in dollar terms was deemed to have the second greatest impact on Australia's tax revenue. Only entertainment company Twenty-First Century Fox surpassed the telco, with the commonwealth "foregoing" $1.6 billion of tax per year.

An Optus spokesperson contested the method of calculation.

"The report 'Who pays for our Common Wealth' mistakenly asserts that SingTel pays just 9 percent tax in Australia," said the spokesperson. "The report has simply and incorrectly calculated tax foregone in Australia by applying the Australian 30 percent corporate tax rate to the accumulated total of SingTel Group profits."

"SingTel is a global telecommunications company with businesses in 25 countries, across three continents... SingTel’s Australian subsidiaries undertake all their legal and governance responsibilities diligently, including their Australian tax obligations."

The report acknowledged this scenario for multinationals, pointing out SingTel Optus as an example: "For dual-listed companies, like SingTel [also listed in Singapore], and other companies with global operations, a portion of tax foregone may be attributable to other jurisdictions."

The other two giant telcos in the ASX200 fared better for Australian coffers in the report's eyes, with Telstra effectively paying the statutory rate and New Zealand Telecom effectively paying 20 percent.

Communications reseller M2 Group was assessed to have paid 25 percent tax, while the only IT reseller in the report, SMS Management & Technology, paid the same – which is 5 percent below the statutory rate.

Internet service providers iiNet, at 33 percent, and TPG, at 41 percent, had relatively high effective tax rates compared with their ASX200 peers. Carsales.com forked out 28 percent and financial software vendor IRESS paid the statutory 30 percent rate to round out the ICT players.

With a major chunk of the "foregone" tax attributable to just a handful of companies, the report emphasised that the majority of the ASX200 paid taxes reasonably close to the statutory rate.

"Only 23 companies make up 75 percent of the estimated tax foregone and just seven companies account for 50 percent of the estimated annual tax foregone – or $4.2 billion in total," the report said. 

"This data indicates that the vast majority of ASX 200 companies actually pay the statutory rate (or very close to it) on their reported profits."

Greatest impact on Australia's tax revenue (2004-2013)
Company Effective tax rate Average annual tax foregone
Twenty-First Century Fox 1 percent $1.6 billion
SingTel (Optus) 9 percent $713 million
BHP-Billiton 27 percent $673 million
Rio Tinto 27 percent $436 million
Westfield 8 percent $370 million
NAB 27 percent $211 million
CommBank 27 percent $194 million
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