08 October 2015
by Joanna Mather

ATO won't name and shame multinationals

The Tax Office will target about 80 multinational companies when new anti-avoidance laws take hold, but commissioner Chris Jordan is promising not to name and shame tax cheats.

Mr Jordan said some multinationals had already started dismantling the sorts of profit-shifting company structures that would be banned under the proposed new rules.

Mr Jordan said the ATO would be entering into discussions with approximately 80 companies from January 1, when the rules kick in.

The 80 estimate expands on an ATO operation which focused on 30 companies. ATO officers were embedded in the 30 companies so authorities could better understand how they operate. Insiders tagged them the "dirty 30".

"We have already been approached by some of the large companies that this will directly impact and are commencing discussions right now as to how some of these structures may be unwound without in itself triggering some sort of tax liability," Mr Jordan said.

"I don't see any particular advantage in us trying to name and shame companies. I am focused on outcomes."

Legislation currently before federal Parliament will enhance Australia's existing anti-avoidance provisions.

The changes will apply to companies with global turnover of $1 billion or more.

Doubled
Penalties are being doubled for enterprises found to be avoiding establishing a taxable presence in Australia.

The Combating Multinational Tax Avoidance Bill includes a requirement for companies to provide a breakdown to revenue authorities, which will be kept confidential, of their tax affairs in each country.

The legislation was introduced in mid-September and Australia was criticised for pre-empting the release of the Organisation for Economic Co-operation and Development's final action plan on base erosion and profit shifting (BEPS), which was released this week.

Treasurer Scott Morrison said Australia was "on the right track" and "well ahead".

Neither the government nor Mr Jordan have ever put a figure on the extra tax revenue that could be raised by closing the tax net on multinationals.

"We know that there are billions of dollars in sales that are booked overseas from activities that directly occur here in Australia," Mr Jordan said. "So the first stage is to have those sales booked here in Australia."

A diverted profits tax introduced in the United Kingdom forced online retailer Amazon to restructure and start booking profits locally. Amazon Europe will declare its UK sales revenues in the UK, rather than Luxemburg.

Avoidance
Mr Jordan said he anticipated companies might make similar announcements in Australia.

The OCED said between 4 and 10 per cent, or somewhere between $US100 billion ($139 billion) and $US240 billion annually, was lost to tax avoidance by multinationals. Mr Jordan said Australia's already strict tax rules meant the leakage here would be at the low end.

Clayton Utz partner Niv Tadmore Mr Morrison was taking a more measured approach to multinational tax avoidance than his predecessor, Mr Hockey.

This was evident in the fact that Mr Morrison had spoken about the potential for tax measures to deter investment and competitiveness if not carefully managed.

PwC managing partner tax Tom Seymour welcomed Mr Morrison's commitment to spend more time working on tax reform here than overseas.

"BEPS is a noble cause but there is a lot more bang for the buck in domestic tax reform for Australia than BEPS," Mr Seymour said.

"BEPS is a politically nice conversation at the moment because it's easy to beat up on big business but Australia has some of the highest corporate and personal tax rates in the world."