Joe Hockey announces profit-shifting tax audit of 10 multinationals 

tax image

Australia will consider passing stronger laws against tax avoidance, the treasurer says, as tax office ‘embeds’ staff within companies

The Australian Tax Office is auditing 10 multinational corporations and the government will consider introducing new laws aimed at targeting tax avoidance, Joe Hockey has said.

The treasurer said on Tuesday the ATO was “embedded in the offices” of multinationals operating in Australia to closely scrutinise whether those companies were paying their fair share of tax. He refused to confirm a report in the Daily Telegraph that these companies included Google.

Hockey said the Australian government was “closely monitoring new developments in the United Kingdom”, where the chancellor, George Osborne, has announced plans to crack down on tax avoidance by multinational technology firms. Osborne’s so-called “Google tax” is a 25% levy on profits generated in Britain but “artificially shifted” abroad.

Hockey said he was working with Britain to understand the detail of the initiatives and he emphasised the need for coordinated global action. “You can take unilateral action here, but if other jurisdictions allow multinationals to get away with it, then whatever you do domestically is not going to work,” he said.

Hockey said the ATO was using its existing powers but the government would contemplate “additional legislative action”.

“We fully expect there to be a greater coordinated effort next year in terms of tax law changes around the world,” he said. “Domestically, I believe there will probably be a number of court cases during the course of next year where existing laws will be tested.

“In the interim we are contemplating further measures that will give the Australian Taxation Office the power to get the sort of information they need.”

The issue was discussed at G20 meetings hosted by Australia this year. The Labor opposition has been calling on the government to do more to tackle multinational tax avoidance.

The shadow treasurer, Chris Bowen, said Hockey had provided few details about the government’s efforts and was “playing catch up”.

“There’s a lot talk about bipartisanship. Mr Hockey could have bipartisanship today if he did something serious about multinational tax evasion,” Bowen said.

The tax commissioner, Chris Jordan, said the ATO’s International Structuring and Profit Shifting initiative was expected to raise over $1bn in additional revenue over the next three years, and had already raised an additional $204m in liabilities.

“We started the year with 86 cases selected for review across a range of industries,” Jordan said in a statement on Tuesday.

“We have now completed 30 reviews, 10 involving tech companies. Further reviews have commenced and we expect 70 to 80 reviews will form part of our ongoing program of work. We expect to commence around 10 audits where we have identified a number of concerns.”

Jordan said the message to multinationals was that the ATO would test their assertions.

“If you are open and meeting your tax obligations we will work with you,” he said.

“If you are not being honest about your activities, then we will go through every transaction, we’ll talk to your customers to verify your claims and we will camp out at your offices checking everything you tell us.”

Hockey said the government was working “as hard as we can to make sure that companies that earn profits in Australia pay tax in Australia”. He said if multinationals did not pay their fair share, then the tax burden fell more heavily on families and small businesses “and that is unacceptable”.

 

Source: theguardian – Joe Hockey announces profit-shifting tax audit of 10 multinationals

Leave a Comment


Broker Cyprus TopFX