When Australia hosted the G20 leaders summit in November last year, the Government agreed to a number of actions to ensure fairness in the international tax system. The OECD, which is leading global reforms in this area, argued that unilateral action could harm the global consensus required to stop multinationals shifting profits to reduce their tax burdens.
Back in March, Treasurer Joe Hockey announced new measures specifically designed to target multinationals using complex schemes to escape paying tax, but shied away from publicly naming the 30 multinational companies that have been identified by the Australian Taxation Office (ATO) avoiding tax.
These multinationals are believed to have set-up complicated structures, involving transactions in several countries, which enables them to divert profits they make in Australia to places where there is little or low tax.
Under the legislation announced by Hockey, which will start from 1 January 2016, the ATO will have greater power to see through contrived arrangements and the Tax Commissioner will have the power to recover unpaid tax, with a fine of 100% of the amount plus interest.
This morning, Treasurer Hockey appeared on ABC Radio and provided an update on the Government’s anti-avoidance rules:
…in December all companies that have a taxable income over $100 million have to disclose how much tax they pay in Australia…
And the next sitting fortnight I’ll introduce that bill and that’s a partnership with the United Kingdom but also with, we’re taking a global lead in going after 30 primarily offshore-based companies that are not paying their fair share of tax.
… we have more resources allocated in the Australian Taxation Office that has already delivered a dividend of $400 million extra tax revenue going after multinationals that are not paying their fair share…
Separate reporting claims that a FOI request revealed that 10 multinationals trading in Australia funneled $31 billion to Singapore in one year to avoid tax, although the names of the corporations were not disclosed.
There is also speculation that a Senate interim report into multinational tax avoidance will be released today, which will make more than a dozen recommendations, including that the ATO disclose all avoidance settlements above a certain threshold, as well as the creation of a name-and-shame register of multinationals avoiding paying tax:
Labor Senator Sam Dastyari, who chaired the inquiry, said the system was “completely broken” and privacy provisions were allowing Australia’s worst offenders to hide.
He said corporates were essentially selling products to themselves, through companies set up in Singapore, to keep their profits down.
“When you have a handful of multinational companies able to take Australian taxpayers for a ride, the system has to change,” Senator Dastyari said.
Regardless, action is afoot to stamp-out multinational tax avoidance. Moreover, for once there also appears to be bipartisan support, which should ensure that meaningful reform actually takes place.
