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29 January 2015

Harvey Norman's Gerry Harvey slams multinationals' tax lobbyists

Billionaire retailer Gerry Harvey has accused Australia's powerful business lobby groups of failing to represent ordinary tax-paying businesses and instead pushing the interests of profit-shifting multinationals.

Speaking after the release of Apple's Australian accounts, which revealed the tech giant had paid just $80 million in tax despite reaping $6 billion in local revenue, Mr Harvey said companies that paid their fair share of tax were being left without a voice in Canberra.

"Without mentioning names, there's a lot of lobbying going on, and they're presenting their case as if they've got a legitimate gripe," the owner of the Harvey Norman franchise said.

"They [multinationals] have lots of lobbyists in Canberra trying to present their case as to why they shouldn't be penalised [over tax].

"They're arguing that they should be treated unequally. That's a very hard argument."

Mr Harvey is one of only a few business leaders to speak out against corporate tax dodging. Wesfarmers chief executive Richard Goyder called in October for Australian companies to "pay tax in the communities in which they operate".

Mr Harvey said the government was being lobbied by multinational companies – both Australian and foreign – that had an interest in seeing tax laws remain weak, rather than be strengthened.

"If a company in Australia has to pay tax and the other one doesn't, of course it's a disadvantage," he said.

"If one person has no voice, and the other person has a voice, that's a disadvantage."

The Business Council of Australia, which represents some of the largest companies operating in the country, said there were risks for Australia if it acted alone in tackling profit shifting.

"We need to act with caution, based on evidence and ensure we don't diminish our already weak competitiveness," a spokesman said.

"Until there is multinational agreement, Australia can continue to enforce its own tax integrity laws, which are already some of the toughest in the developed world."

The Corporate Tax Association executive director Michelle DeNiese said: "We agree that large corporates should be paying their appropriate share of tax."

"What we don't agree with are views that paint a picture that the Australian corporate tax system is fundamentally flawed and that corporate taxpayers in Australia are inappropriately minimising their tax bills."

According to accounts filed with the corporate regulator, Harvey Norman paid more tax than Apple last year, $89 million compared to $80 million, on a quarter of the turnover. This was with revenues of $1.5 billion and a pre-tax profit of $301 million.

However comparisons of the two companies are fraught, given the different nature of their businesses.

Apple's latest tax bill, while a fraction of its overall income, was more than double what it paid the previous year.

Its release comes amid an investigation by the Australian Tax Office of 10 multinationals operating in Australia.

An investigation by Fairfax Media last year showed Apple had shifted $8.9 billion in untaxed profits from its Australian operations to Ireland in the past decade.

Whereas the actual amount of tax a company pays is confidential under Australian law, an expense figure is calculated for the purpose of annual accounts.