Australia promises crack down on corporate tax avoidance
Government looking into avoidance strategies of 30 multinationals
Google is among 30 multinationals to be investigated for alleged tax avoidance. Its Australian subsidiary has denied any evasion.
The Australian government announced a world-leading crackdown on Monday on alleged tax avoidance by 30 multinational companies that will likely force them to restructure their businesses before next year.
“These companies are diverting profits earned in Australia away from Australia to no-tax or low-tax jurisdictions,” treasurer Joe Hockey told reporters in Canberra.
He declined to identify the targets, but said “it’s pretty evident which companies are involved”. Google, Apple and Microsoft revealed earlier this year they were under review by the Australian Tax Office.
Australia has joined Britain in moving to tackle companies such as the global tech giants over tax avoidance, particularly the shifting of profits from high-tax countries to more relaxed regimes like Singapore and Switzerland.
Under Australia’s leadership last year, the Group of 20 leading economies (G20) endorsed a set of common standards for sharing bank account information across borders with automatic exchange of information among members.
Mr Hockey did not detail the content of the proposed new laws, including how much money Australia expected to raise through them, which will be part of the federal budget due for release on Tuesday.
“We have identified the sums that have been shifted but now identifying the actual amount that is required to be remitted in tax is a different story,” he said.
Mr Hockey said the laws, which must first pass parliament, would come into force on January 1st.
“If they (multinational companies) have got a (non-conforming tax) structure, given the size and scale of the fines, which are very significant, as soon as they start to restructure, then you would expect they would start to pay tax in Australia,” he said.
Companies could be fined up to 100 per cent of the amount of tax deemed to be avoided, he added.
Mr Hockey said the proposed legislation was the first in the world and had attracted considerable interest at a G20 finance ministers and central bankers meeting in Washington last month.
“There was a lot of interest from other finance ministers who would like to participate in the work that has gone into this legislation - and perhaps take it to their own countries as well, including China,” he said.
One country watching more warily than most may be the United States, which originally backed the G20 push to share information but has since become concerned about Britain, Australia and other nations lining up against US digital companies as they seek extra revenues to trim budget deficits.
The Australian subsidiaries of Google, Apple and Microsoft have all denied any tax evasion.