Some 13.4 million records from Bermudan law firm Appleby have been leaked to the international press, with records covering the period from 1950 to 2016. And this leak, dubbed the “Paradise Papers”, has implicated several multinational corporations in tax avoidance, prompting the Australian Tax Office (ATO) to take action. From The ABC:
The Australian Tax Office (ATO) has taken action against 19 multinational companies as it unpicks a scheme capable of pushing millions of tax dollars offshore.
The ATO is also cracking down on high-profile Australian advisory firms and an international web of offshore law firms suspected of promoting tax avoidance schemes through tax havens…
The largest leak of documents in history has exposed the tax secrets of a host of large multinational companies.
The Paradise Papers leak has uncovered confidential emails, board minutes and tax-structuring plans originating from global offshore law firm Appleby, Singaporean firm Asiaciti Trust and 19 corporate registries in tax havens, obtained by German newspaper Suddeutsche Zeitung.
The documents show how major multinationals have used the tax haven of Bermuda to structure their Australian debts and employ complicated financing schemes for their Australian subsidiaries, with the suspected goal of dramatically cutting their Australian tax bill…
ATO deputy commissioner Mark Konza said investigations had led to 19 companies that appear to be exploiting a scheme known as cross-currency interest rate swaps…
A total of 19 companies have faced ATO action over the scheme, with 13 of them still under review.
On top of the targeted companies, the ATO has issued legally-binding formal notices to advisory firms, asking them whether they helped implement the swaps or other tax-driven schemes.
Four Corners can reveal 21 formal notices have been issued to accountants and other so-called “intermediary” firms in Australia, with further action expected.
And Mr Konza said the ATO was stretching its net offshore, saying international tax regulators wanted to disrupt the operations of offshore law firms in tax havens.
He also said the ATO wanted the Paradise Papers data to begin “analysing the Australian implications”…
The Paradise Papers show Australia’s largest coal miner, Swiss-based Glencore, used the swap financing scheme that has been the subject of scrutiny by the ATO…
The ATO seems to be taking this issue very seriously. In May it issued new guidelines governing loans made by multinationals to their local units in the wake of the Chevron tax case. The guidelines set out what the ATO expects is reasonable in terms of the interest rate foreign companies charge their subsidiaries, which in turn decides the level of tax deductions that are then claimed. ATO Deputy Commissioner, Jeremy Hirschhorn, at the time said it was confident of raising a significant amount of extra tax in the wake of the new guidelines.
And in July, The AFR reported that the ATO was instigating legal action against at least five companies over alleged breaches of thin capitalisation laws.
Go get em, ATO.
