Friday, November 16, 2012, 08:24 am PT (11:24 am ET)
Apple's Australian arm charged with $28.5M in back taxesThe Australian Tax Office has hit Apple with a $28.5 million bill for back taxes, in what is viewed as a sign that the country may start cracking down on foreign tax havens.
Details on the $28.5 million bill are unknown, as it is illegal for the ATO to comment on individual cases. But the Brisbane Times reported on Friday that the ATO may be joining a tax push led by European governments targeting companies that shelter funds through intermediary companies in foreign countries.
Apple's Australian arm is owned by Apple Operations International, which is a subsidiary located in Cork, Ireland. Many companies have operations in Ireland to capitalize on the country's low corporate tax rate.
Last year, Apple earned $4.87 billion in revenue from Australia. Its total tax bill for its 2011 fiscal year was $94.7 million.
Apple's store in Sydney, Australia.
European governments have been looking to collect taxes from companies that rely on foreign tax havens. This week, the French government demanded $252 million in back taxes from Amazon, which relies on a tax haven in Luxembourg.
Apple sells devices to customers in Australia, but companies such as Google and eBay won't even admit to dealing with customers down under.
"Instead, according to its most recent report, Google Australia provides 'research and development services' to its U.S parent and 'sales and marketing services' to Google companies in Ireland and Singapore," the Brisbane Times reported. "For its part, eBay Australia and New Zealand's annual report discloses its principal activities as "the recommendation of market penetration strategies and advertising and promotion activities."
Apple also came under fire from regulators in Australia earlier this year, when the company was slapped with a $2.3 million fine for falsely advertising the 4G LTE capabilities of the third-generation iPad. The Australian Competition and Consumer Commission took issue with Apple's promotional materials which claimed the device offered 4G connectivity. But the ACCC felt the ads misled customers into thinking the device would work on Long-Term Evolution networks in Australia.
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