Income tax sucks and doesn’t work anymore.28.08.2019
There is a 21st century problem that cannot be solved by a 19thand 20thcentury process. Income tax for companies and individuals have served us well, but no longer represent a fair way for businesses and individuals working in Australia to pay tax.
Well it works fine for multinationals. Here is an example:
Netflix –know them, well we are being ripped off by this multinational and nothing is getting done about it.
From the Australian Financial Review
Netflix is making hundreds of millions of dollars from Australian Consumers but the revenue is booked by a Netherlands Basedcompany, this raises questions about how multinational corporations classify revenue locally and highlights the tax challenges of the global digital economy. Netflix customers and not billed by a local entity but are instead paying Netflix International BV, a subsidiary of the US-Listed Netflix Inc, based in Amsterdam.
It’s quite common for a parent company multinational to lend the Australian subsidiary “on the books” a large amount of money, and extract any income that could have been taxed in interest.
We have worked with struggling Australian Businesses for 25 years. By far the majority of SME’s in Australia want to do the right thing in paying taxes (different from that fact we all think we pay far too much for what we get) and have a gigantic stupid piece of legislation. The guide to the Australian Tax Act is over 3,000 pages, hell that’s just the index.
Yet, these greedy multinationals, that can be called to task if they fall behind in tax, (and I guess quite rightly so), have gone too far.
Income tax can be beaten every time –or they extract the money from Australia like Netflix.
There are a number of finance writers and commentators that are now talking about financial transaction taxes. If money moves, our tax law would skin a percentage off the top. Rates could vary for those multinationals who have subsidiaries here and trade here (not much of a scrape) to massive scrapes when the funds are directly taken out of Australia without any trade or representation in Australia.
It’s time to start making real noises about this. We’ve never written a blog that would be considered political, but it’s now time to start talking about this regularly.
My clients are paying taxes, and often struggle to do so, but they get there. I pay taxes, so I want the multinationals to pay tax as well.