There wasn’t much time for lunch at the tax inquiry on Wednesday but there was a lot of discussion about Irish and Dutch sandwiches.

I don’t have that information
– Apple Australia chief, Tony King

Apple Australia chief Tony King told the Senate inquiry into corporate tax avoidance that he did not know what a “double Irish Dutch sandwich” was despite this being a globally recognised and infamous tax avoidance structure which involves capital being rerouted from a country like Australia via Ireland to The Netherlands and back to Ireland again.

Apple’s Australian chief Tony King denied at the Senate inquiry into corporate tax avoidance last year that the company does not pay its fair share of tax. Photo: Christopher Pearce

There was much stonewalling, obfuscation, taking of questions on notice and sniggering from the gallery of onlookers throughout the afternoon.

Is Apple product sold for a higher price in Australia?

“I don’t have that information,” King said.

Google Australia chief Maile Carnegie was asked how profits from Australian customers ended up in Bermuda. Carnegie said she didn’t know. She hasn’t been to Bermuda either.

“I know we have a simple tax structure here in Australia,” she said in relation to Google Australia’s actual statutory revenues in Australia hailing from Google Ireland, Google Inc and Google in Singapore (which get research and development tax breaks). It has just three customers. Although its advertising revenue from thousands of Australian customers is routed via resellers, through Singapore, and is not even subject to income tax here, let alone GST.

Unlike her peer Tony King, Maile Carnegie told the Senate she did know what a double Irish Dutch sandwich was and she made some effort to explain it.

As for the Bermuda leg of the capital journey: “I acknowledge there is a lot more complexity to the Google global tax structure but I don’t have those details today.”

Greens’ leader Senator Christine Milne said: “You get very generous R&D tax breaks in Australia but your Irish company domiciled in Bermuda pays no tax. Isn’t that effectively what Google Australia is doing?”


“Why not?”

A circuitous answer was forthcoming. Circumlocution was the order of the day.

Carnegie conceded that the revenue gained by Google for advertising service from Australia customers was booked in Singapore. And yes, Google still helped itself to $4.5 million in R&D tax breaks.

She also revealed on questioning that the IP from Google Maps, which was developed in Australia, had since been transferred to the US.

As for the matter of how pricing was determined on sales by Google to related party entities offshore: “The costs are determined by going to an external consultant.”

“Who is the external agent?”

“I actually don’t know the answer to that.”

Bill Sample from Microsoft was asked about the double Dutch sandwich.

“We have never used the Dutch sandwich.”

What about a double Irish sandwich?

“Yes, we do have a double Irish sandwich.”

He said there had been $2 billion in software product and service revenue booked in Singapore but only  $100 million in Australia.

“Microsoft Australia is owned by a European holding company which is controlled by Microsoft in the US.”

Apple chief King was told by the committee Apple had shifted close to $10 billion to Apple Ireland. He denied there had been any profit shifting at all. It all depends, as is the way with multinationals, what is classified as a profit.

The committee became increasingly frustrated as the word games went on. There are three ways to shift money between countries: interest on loans, dividends on shares and royalties in intellectual property.

These and other tech companies, the new breed, shift billions in value offshore as they claim their intellectual property belongs in another country.

Meanwhile, they have a penchant for bulking up their costs in Australia, as this is a high tax jurisdiction, in order to declares as little profit as possible.

For tax is levied on profits – not the huge cash flows these companies generate – so it is best to eradicate your profits here and move them to Singapore where there are 5-10 per cent corporate tax rates for bigger enterprises, Ireland (12.5 per cent) or Bermuda (zero).

That’s a lot more profitable for the global enterprise. Our corporate tax rate here is 30 per cent.

What was clear from Wednesday’s proceedings, not even denied, was that these companies at the vanguard of global tax avoidance are mere agencies or puppets for their global masters. They are not bodies corporate in the traditional sense and should be treated as such. The challenge is that the traditional multinationals themselves are increasingly mimicking those agency models and dodging ever more tax on the basis that if they pay a smidgen of tax why should we pay so much. It may get worse before it gets better.