Dell Australia tax bill reduces profit to AU$52m
Dell Australia has made its annual financial results available to the Australian Securities and Investments Commission (ASIC), reporting after-tax profit of AU$52.4 million, up from the AU$11.5 million recorded in 2017.
During the 12 months ended January 31, 2018, the local arm of Dell and the Australian Taxation Office (ATO) entered into an Advance Pricing Arrangement (APA) for an agreed APA period commencing from February 1, 2017.
As part of the APA terms, Dell Australia said it agreed to an additional compensating adjustment of AU$36.5 million for the financial period from February 1, 2014 through January 31, 2017.
"Consistent with the company's accounting policies, the company accounted for the change in the level of operating profit in the current year as the discussions with the ATO were only finalised during the year," Dell explained.
"The purpose of this Advance Pricing Arrangement is to establish, in accordance with Australia's income tax law, an appropriate arm's length outcome arising from the related party international dealings."
With pre-tax profit totalling AU$75.2 million -- up from the AU$16.9 million recorded a year prior -- income tax paid for the year was AU$22.8 million.
For the 2017 financial year, Dell paid AU$5.4 million.
The AU$22.8 million was comprised of current tax totalling AU$11.7 million, deferred tax of AU$99,000, APA adjustments from prior periods of AU$10.96 million, adjustments for current tax of prior periods of AU$331,000, and a reduction of AU$243,000 due to adjustments for deferred tax of prior periods.
The Australian government legislated a new Diverted Profits Tax (DPT) in March last year, which is intended to prevent the practice of multinational organisations shifting profits made in Australia offshore to avoid paying tax.
The DPT hits multinationals with global revenue of more than AU$1 billion and Australian revenue of greater than AU$25 million with a 40 percent tax on all profits.
The tax is expected to see AU$100 million in revenue per year from 2018-19 stay on Australian soil.
Dell Australia's revenue for the 12-month period was AU$347.7 million, up from last year's AU$268.4 million.
The immediate parent entity of Dell Australia is Dell International LLC and its ultimate parent entity is Dell Technologies, both of which are incorporated in the United States.
Related parties of the local company are listed as Boomi Inc, Dell (China) Company Limited, Dell Financial Services Pty Ltd Australia, Malaysia's Dell Global Business Center Sdn. Bhd., Dell Global BV (Singapore branch), US-based Dell Marketing LP and Dell Products LP, Dell USA LP, EMC Global Holdings Company (Australia), SecureWorks Australia Pty Ltd, and SecureWorks Inc.
A report from the Australian National Audit Office (ANAO) in December revealed the Australian government spent a total of AU$36 billion on IT-related procurement from 2012-13 through 2016-17, with a handful of technology giants receiving the majority of the procurement spend.
Dell received over AU$300 million from the federal government during the five-year period.
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