Volkswagen CEO Martin Winterkorn: 'I am clearing the way for this fresh start with my resignation.' Credit:Getty Images "The ATO needs to start explaining how this company can double its sales and pay less tax," says Knapp. "In 2007 it sold 28,000 cars (passenger, commercial vehicles and Skoda) and paid $11.8 million in tax. Last year [2014], it sold 57,000 and paid $9 million in tax." Volkswagen has been one of the great success stories in the Australian car market. Audi and Porsche too, ultimately controlled by the same ultimate parent company as Volkswagen, have also sold very well, and been paltry tax payers too. When it comes to tax , like most multinationals operating here, the pattern is one of a contribution which has gone backwards over the past decade. Despite rising sales, their reported profits have stayed flat and so therefore has the amount of tax they pay. If you believe the financial statements of Volkswagen Group Australia, audited by PwC, this company makes a mere average of $220 on each car it sells in here.

Credit:Getty Images As Knapp points out, the inferred GST take over the eight years is $1.1 billion ( 10 per cent of Volkswagen's $11.6 billion in sales) while actual income tax paid averages just over $10 million a year ($85 million all up); one-tenth of GST and less than one per cent of sales. Of course, companies don't pay GST, their customers do. A portion of what VW - and Porsche and Audi for that matter – is skimming from Australia, via its immediate parent entities in the Grand Duchy of Luxembourg and the Netherlands, ends up in tax havens - that collective, leviathan pool of capital estimated at $US7.6 trillion, roughly eight per cent of the world's wealth. Transfer pricing How do they do it? How does Volkswagen keep its tax ("leakage" as they call it in the trade) to less than one per cent of the billions in cash which rolls in the door?

Digging a little deeper, the gross profit margin last year was 10.7 per cent. For each car they sold, they made $3220. Sounds reasonable, but the net profit margin is the revealing number. The trick for multinationals is to bulk up their costs in higher tax countries like Australia. This they do with aplomb, making an average profit last year of only $220 a car. The year before it was just $120 a car. If you believe the financial statements of Volkswagen Group Australia... this company makes a mere average of $220 on each car it sells in here. "It just doesn't add up," says Knapp. "This is a high quality product; there is brand differentiation, reputation, it is high value. It's not a carton of milk." A bit gets ripped out the usual way, via related party loans ($154 million last year), and suspiciously high charges for the likes of "marketing support" ($211 million - also with a large related party component) and of course the ubiquitous "other". But most of the profits, like the Big Pharma model, are smuggled out by virtue of ye olde transfer pricing; the price, that is, at which assorted VW entities charge each other for their products.

Incidentally, readers who have had the misfortune to have their car serviced at an "authorised dealership" will be interested to know that VW's revenue from "parts and accessories" over eight years has doubled from $59 million to $120 million. Moving along to stable-mate Audi, another resounding success story in the Australian market, and the tax leakage is of comparable magnitude. Audi, like so many of its multinational peers, has not bothered to obey the Corporations Act and file its annual accounts with the regulator. The most recent set though, also audited by PwC, show $5 million in tax and sales of $832 million for 2012. (How is the Tax Office supposed to do its job when nobody is enforcing the financial reporting laws?) Same deal for Porsche, which booked $4.5 million in tax on revenues of $428 million but Porsche (like its customers) has shown considerable flair. Its profit and loss statement records a bizarre $331 million for "changes in inventories of finished goods and work in progress" for 2014. An equally curious $242 million was booked the previous year (on sales of $313 million) in charges for "raw materials and consumables used". Err, excusez-moi but has anybody noticed a Porsche factory around the traps lately brimming with "raw materials" and "work in progress"? We had been labouring under the misapprehension that Porsche imported cars from Europe.