On September 12, a range of US organisations, including the American Chamber of Commerce in Australia, wrote to the US Treasury Secretary, Scott Bessent. In the now required fashion, they first expressed their, “appreciation for President Trump’s steadfast commitment to eliminating tariff and non-tariff trade barriers that impede the global competitiveness of US companies”, then they proceeded to complain about “Australia’s recently enacted Public Country-by-Country Reporting (PCBCR) regime”.
The PCBCR regime, enacted by Labor late last year, requires the public disclosure of tax and revenue information for all multinationals operating in Australia, including US companies. The letter specifically asks, “Given these concerns, and in the spirit of fostering fairness to allow US companies to thrive and compete globally, we respectfully urge you to engage with Australian authorities to address that country’s infringement on US companies”.
Many US companies invest considerable efforts in optimising their tax positions, often through profit shifting, and pay remarkably low levels of tax in Australia when compared to their gross revenue – including almost all the large technology companies such as Meta, Apple and Microsoft. Unfortunately, the “Global Minimum Tax” deal propounded by the OECD and aimed at effectively eliminating tax haven has disappeared with Trump’s return, and his zeal to turn the US into one large tax haven for corporates.
Lets mention some numbers drawn from the ATO’s corporate tax transparency report from 2022-23, they are a little old, but still instructive. In that report it indicates that Apples revenues in Australia were just over $12.6B, on which they paid tax of $141.7m – a rate of 1.12%. Meanwhile, Microsoft had revenues of $7.5B and paid tax of $118M – a rate of 1.57%. Comparing tax rates on the basis of gross revenue is perhaps unfair but is anyone going to argue that both Apple and Microsoft have very large gross margins – the profit simply went somewhere else to be taxed (maybe) at a lower rate.
There are other issues that US corporates will likely also raise prior to any initial meeting between Trump and Albanese – including the PBS and digital taxation and regulation. It would be unwise for Albanese to yield on any of these issues, even in the face of tariff or AUKUS threats, since these are matters of sovereignty and Trump is deeply, deeply unpopular in Australia.
American firms should also understand that while the Australian population still discriminates to some degree between Trump and American people and businesses in general, we are much closer in character to Canadians. If push comes to shove, we are similarly disinclined to back down.
Trump has been manifestly successful in undermining Western security alignments in a very short period and this may mean or require a more independent defence stance by Australia. Many people would not bemoan the disappearance of AUKUS, which is prehistoric in its strategy and dependent on a partner that shows every sign of “national dementia”. It is also about time the Australian Defence Forces actually started thinking really independently and demonstrating an ability to deliver.
