Joe Hockey’s tax reform ‘too little, too early’, says Sam Dastyari
Treasurer Joe Hockey is facing criticism for both acting too quickly and not doing enough on tax avoidance by multinational ¬companies after tabling legislation on Tuesday night to stop companies shifting taxable profits out of Australia.
An unnamed 30 multinational companies with more than $1 billion in revenue from Australia would be hit with penalties of double the tax due, plus interest, from January 1 if they were found to be artificially structuring their affairs to avoid paying tax in Australia or elsewhere in the world, according to a draft exposure of the legislation.
Labor senator Sam Dastyari, who is leading a parliamentary inquiry into tax avoidance, said the measures did not go far enough in addressing the behaviour of companies.
Senator Dastyari called for the government to take specific action on Singapore, which, the inquiry has heard, is used by companies from Apple and Google to Rio Tinto and BHP Billiton to channel billions of dollars in revenue out of reach of the tax office.
“What the Senate inquiry has been looking into is the role that Singapore has been playing as a tax haven jurisdiction for Australian mining companies and multinational technology companies,” he said. “The budget would have been stronger in this space if there had been measures addressing the role of Singapore.’’
Tax experts said the legislation was a “significant’’ addition to the armoury of the ATO but that they would have preferred for the government to wait for co-ordinated international measures to address the problem.
The measures, announced just days before the budget, follow Australia’s presidency of the G20, which resolved to combat so-called base erosion and profit shifting by companies that has undermined the tax revenue of the world’s ¬biggest economies.
The legislation aims to ensure that multinationals cannot use complex, contrived and artificial schemes to escape paying tax.
Under the G20 agreement the countries were going to await international agreement on the specific reforms each country would take to ensure they were uniform and could be consistently applied and that countries did not get into tax bidding wars to lure corporate headquarters.
But the government legislation puts Australia out in front of a process being run by the Organisation for Economic Co-operation and Development.
“There is a clear groundswell of public opinion demanding greater transparency of multinational tax affairs and that multinationals pay their ‘fair share’ of tax,’’ said David Linke, accounting firm KPMG’s national corporate tax leader.
The government said it was committed to the two-year G20-OECD project.
“While it is essential, immediate action is required to ensure that Australia’s tax laws are fit to deal with the most egregious tax avoidance arrangements.’’
Mr Hockey would not say which companies were being targeted but hinted that they were foreign-domiciled and said the measure was worth “billions’’. It is believed the measures are designed to catch technology companies who sell goods to Australia but book revenue in low or-no tax jurisdictions.
The budget papers did not identify a sum to be raised over the four years of the forward estimates. The tax office has had staff embedded in the companies to understand how they operate but a reliable estimate of the income from the tax change is not expected until the law is enacted.
The legislation is the latest in a series of steps taken by the government to address a slump in budget revenues following the collapse of the iron ore price.
The government has also launched a task force to investigate corporate tax avoidance and unveiled a new, so-called “Netflix tax” that applies the goods and services tax to items bought over the internet from digital providers.
