Gerard Rennick (Queensland, Liberal Party) Share this | Hansard source

I rise today to speak to the issue of transfer pricing in Australia, in particular transfer pricing of profits sent offshore. I thought I'd go through a bunch of companies that I don't particularly like—Google, Meta, Pfizer—and look at how much they transfer offshore in comparison with their worldwide accounts, and I picked on one of my favourite companies, Pfizer. Their Australian entity earned $1.36 billion in sales, yet they made an operating profit of only $90 billion, which works out to be a ratio of about 6.6 per cent. In other words, they transferred 94 per cent of their profits offshore. I then compared that with their worldwide accounts. They had $100 billion in revenue and made an operating profit of just under $35 billion. What that means is that their operating profit ratio worldwide was 34 per cent.

The question we need to ask ourselves is: why is Pfizer making an operating profit worldwide of 34 per cent but an operating profit in Australia of only six per cent? Of course, all multinationals love to shift their profits offshore, because in Australia we have an onshore tax rate of 30c in the dollar and an offshore tax rate, depending on tax treaties, of between zero and 15c. If they can transfer their profits to lower-taxing jurisdictions, say the Netherlands or Ireland, they will pay much less tax.

After I had a look at these differences in ratios, I turned to the back of their financial statements to look at related party transactions. Who should their two biggest payments in related party transactions have been paid to? None other than Pfizer Ireland and Pfizer Netherlands.

I call on the Australian Treasurer to lift the rate of withholding tax on profits sent offshore, because we need to retain our earnings here in Australia.