Back in July, ABC’s The Business and Michael West featured an extraordinary raft of allegations from a 32-year veteran industry insider turned whistleblower, George Rozvany, who claimed that multinational tax avoidance was “out of control” and cost the Budget up to $50 billion dollars a year in lost revenue.
Rozvany claimed the Big Four accounting firms – PwC, Deloitte, KPMG and Ernst & Young – were the key masterminds behind the tax dodging. He also cited sham transfer pricing arrangements as a key avenue by which multinational tax avoidance takes place:
“Transfer pricing behaviour clearly is the greatest concern because it’s very easy for a transfer pricing expert to dress up a sham transaction as a real commercial transaction”…
“I’m talking about service arrangements, intellectual property transfers, such as patents or use of patents, and perceived transfer of goods, sham loans between related parties, but in reality it’s all about providing services at too high a price which then shifts [income] to a lower tax jurisdiction.”
Now Michael West has released another alarming report about multinational tax avoidance featuring Michael Hibbins – a former executive of a global oil major operating in Australia – who claims that tax avoidance is “rife”, with tax avoidance taking place mostly via transfering profits offshore while accepting the transfer of group costs into Australia:
All multinational tax schemes rely on the use of related party contracts…
Tax advisors quickly realised the new authority structure would allow them to manipulate group tax exposure by both shifting revenue out of – and pushing (often artificial) costs into – high tax regimes such as Australia…
The accumulation of income taxes avoided in these countries over decades has been a significant commercial advantage for multinationals versus their local competitors…
What is clear is that multinational executives, the Big Four and their legal advisors have vested interests in maintaining the status quo…
Tax accountants and lawyers also have a vested interest in preserving the tax avoidance industry from which they benefit…
Profits which were sourced from Australia should now be correctly taxed in Australia…
We of course need to hold the government and its advisors, which include the Big Four, which plays both sides of the street, to account.
It is an incredibly detailed report that is worth reading.
That the Turnbull Government can even consider gifting foreign owners/shareholders a 5% company tax cut beggars belief in light of these allegations.
