IBM, Atlassian and Unisys were among some of the world’s largest IT companies to avoid paying any Australian tax last year, new data released by the Australian Taxation Office reveals.
The ATO on Thursday published its fifth annual corporate tax transparency report, disclosing the tax bills of the country’s biggest companies during the 2017-18 financial year.
It covers 2214 Australian public and foreign-owned companies with incomes of $100 million or more and Australia-owned private companies with an income of more than $200 million.
The report show that 710 of these companies paid no tax in Australia in 2018, including at least 25 IT companies – some of which have avoided paying tax on multiple occasions since the reporting regime began in 2013-14.
While the majority of the IT companies avoided paying tax because they did not generate any taxable income during 2017-18, several paid no tax despite generating income.
They include:
- Australian agile poster child Atlassian, which had a taxable income of $138 million on $1.04 billion in revenue.
- BAE Systems, which had a taxable income of $78.7 million on revenue of $1.05 billion.
- Multinational cyber security and defence company Trend Micro, which had a taxable income of $26.2 million on $132.2 million in revenue.
- IBM, which had a taxable income of $22.9 million on revenue of $3.03 billion.
- Australian networking equipment vendor Netcomm Wireless, which had a taxable income of $18 million on $176.6 million in revenue.
- Unisys, which had a taxable income of $2.1 million on revenue of $242.4 million.
- Dimension Data, which had a taxable income of $0.9 million on $572.6 million in revenue.
- Printing vendor Ricoh, which had a taxable income of $0.8 million on revenue of $393.5 million.
Of the above IT companies, IBM and Atlassian also paid no tax in 2016-17 and 2015-16, while BAE Systems and Unisys paid no tax in 2016-17 and 2015-16, respectively.
Companies that did not to pay tax during 2017-18 because they did not generate any taxable income were also present on the list.
At least some of this can be explained by losses, which are for both accounting and tax purposes, or signal a company is using offsets against their profits to reduce their tax obligations.
The loss-making companies include IT service providers DXC ($1.18 billion revenue), Datacom ($505 million revenue), NEC ($436 million revenue), ASG Group ($400.5 million revenue), Capgemini ($320.9 million revenue) and Nuance ($187.9 million revenue).
Software giant SAP ($1.05 billion revenue), as well as systems integrators Dimension Data ($572.6 million revenue) and Lockheed Martin ($482.8 million revenue) were also present on the list.
Telcos Vodafone ($3.46 billion revenue), NBN Co ($2.03 billion revenue) and Verizon ($174.6 million revenue) could also be found, as were distributors Ingram Micro ($2.18 billion revenue) and Tech Data ($441.2 million revenue) and Hills Limited ($253.2 million revenue).
Other IT companies, data centre providers and device manufacturers, include Toshiba ($236.6 million revenue), NTT ($198.9 million revenue), NextDC ($162.1 million revenue) and Garmin ($153.3 million revenue).
Deputy commissioner Rebecca Saint said that while, as in previous years, paying minimal or zero tax was often due to losses, the “number of large companies paying no tax continues to decline”.
“The positive trend we are now observing is that many companies have ceased generating accounting losses and are now offsetting profits by utilising losses from prior years,” she said.
“We expect many companies to exhaust these losses and begin paying income tax in the coming years.”
“However companies that consistently report sustained losses do raise a red flag. The community should be reassured that we closely scrutinise the tax affairs of the largest companies.”
But despite the number of large companies paying no tax falling during 2018, many tech firms were still paying well below the full corporate tax rate of 30 percent.
Google, which brought in $1.03 billion in revenue, paid $37.2 million on a taxable income of $188.1 million during the period, making its effective tax rate 19.8 percent.
This was an improvement on 2016 and 2015, when the company paid an effective tax rate of 18.6 percent and 13.2 percent.
TechnologyOne also continued its run as an outlier, paying $10.1 million on a taxable income of $97.2 million in 2018 – an effective tax rate of 10.4 percent.
Infosys, which last month secured a contract with Services Australia to transform Centrelink’s complex payments calculation engine, paid $33.4 million on a taxable income of $179.6 million – an effective tax rate of 18.6 percent.
Other IT companies that paid a tax rate of lower than the full 30 percent corporate tax rate include:
- Citrix, which paid $4 million on a taxable income of $19.5 million and $276.3 million in revenue (20.3 percent).
- Rhipe, which paid $1.6 million on a taxable income of $7.3 million and $122.1 million in revenue (21.7 percent).
- VMWare, which paid $2.6 million on a taxable income of $12.3 million and $194.5 million in revenue (21.1 percent)
- CA, which paid $5.3 million on a taxable income of $20.9 million and $155.7 million in revenue (25.3 percent).
- Civica, which paid $8 million on a taxable income of $31.3 million and $167.4 million in revenue (25.7 percent).
- Fujitsu, which paid $17.9 million on a taxable income of $67.7 million and $1.03 billion in revenue (26.4 percent).
- Tata Consultancy Services, which paid $50.7 million on a taxable income $184.5 million and $780.8 million in revenue (27.5 percent).
- ARQ Group, which paid $5.6 million on a taxable income of $20.3 million and $198.2 million in revenue (27.7 percent).
- Data#3, which paid $6.3 million on a taxable income of $22.3 million and $1.17 billion in revenue (28.3 percent).
- Fuji Xerox, which paid $33.5 million on a taxable income of $118.5 million and $1 billion in revenue (28.3 percent).
The IT companies that paid the full 30 percent corporate tax rate – or just under – include:
