IBM seeks to distance itself from Aussie tax debate

IBM Australia has sought to remove itself from the debate surrounding the amount of tax technology companies pay in Australia, telling a parliamentary committee that it has a very good reputation with the Australian Tax Office.

In a submission to the committee - which is investigating the issue of tax avoidance - last week, IBM Australia said it had an average effective tax rate of 27 percent, just under the 30 percent Australian rate for company tax.

The company said it was considered a "low risk taxpayer" by the Australian Tax Office, and that the agency was satisifed with the level of tax paid by the technology giant.

The ATO had undertaken two previous reviews into IBM Australia for tax avoidance in 2008 and 2011, the company said, which "involved detailed examinations of IBM Australia's tax affairs including its related party dealings".

"The ATO concluded that IBM Australia was properly meeting its Australian tax obligations and the reviews did not result in any adjustments to IBM Australia's tax liability," IBM Australia CFO Tammy Evans and group taxation manager Robert Zizic wrote in the submission.

The company said it also voluntarily approached the ATO in 2012 to ensure it was correctly recognising income for tax purposes.

IBM reported an Australian profit of $233 million on revenue of $4.1 billion in its last financial year, and paid tax of $94.6 million.

The company also said it had entered into an advanced pricing agreement with the ATO, which pre-sets the amount of tax to be paid by a company in years ahead.

Technology giant Apple was recently denied a renewal of its long-running APA by the tax office.

The ATO has been working to stamp out cross-border tax structures and profit shifting used by multinationals to reduce the amount of tax they contribute in higher-taxing countries like Australia.

Google and Apple have become the faces of corporate tax avoidance practices in the technology sector, being singled out on multiple occasions by the ATO and politicans alike.

Google recently hit back, arguing its global average tax rate for 2014 was 19 percent, only slightly lower than the 25 percent OECD average.

Both companies say they fully comply with local tax obligations.

Corporate tax is the second largest source of income to the Australian Government behind income tax. In 2012-13, corporate tax revenue totalled $66.9 billion.