Ending secret identities is the ‘new frontier’ in fighting tax evasion: OECD’s head of tax Pascal Saint-Amans
Revealing the secret identifies behind shell companies and opaque trusts is the “new frontier” in fighting tax evasion, says the OECD’s head of tax Pascal Saint-Amans.
In an exclusive interview with Fairfax Media, Mr Saint-Amans also spoke about the Turnbull government’s tougher domestic laws aimed at cracking down on multinational tax avoidance, which, according to the tax man, are expected to lead to $4 billon in new tax bills issued against the nation’s biggest companies.
But the Paris-based Mr Saint Amans, who is the public face of the OECD/G20 crackdown on multinationals, said, while Australian laws appeared to be in line with the global plan to fight profit-shifting, it was possible tax authorities in other nations such as the United States could dispute Australia’s right to tax.
The Australian Taxation Office’s Mark Konza told Senate estimates last week there were about 1300 Australians identified as being linked to the Panama Papers, but did not say how much liabilities they expect to raise from the individuals involved in tax avoidance.
Tax Commissioner Chris Jordan told estimates he was not sure that a beneficial ownership register would be “a panacea” in fighting tax evasion.
But Mr Saint-Amans said: “Access to beneficial ownership information is probably the new frontier in … fighting tax evasion.”
Call for public register
Groups such as Transparency International Australia have called for a central register to record beneficial ownership information. They want this information to be available to the public.
Submissions also call for the anonymous people behind trusts to be revealed. The Treasury consultation paper on beneficial ownership reforms does not apply to trusts.
Mr Saint-Amans did not go as far as calling for a public register, but did say that could be the next step.
The OECD/G20 had already established a common reporting standard that would allow tax authorities to ask financial intermediaries to hand over specific information. As for a public register, “we are not there yet”.
“Yes it would be fantastic to be able to fly to Mars but let’s first fly to the moon,” he said. “Let’s make sure we have …good systems that make the information accessible.”
“Access to beneficial ownership information is probably the new frontier in …fighting tax evasion”
Pascal Saint-Amans, OECD head of tax
Privacy issues would need to be considered if that information was made public, he said.
Limit on Australia’s right to tax
A number of companies, including tech giant Google and social media behemoth Facebook, are restructuring their tax affairs in response to the federal government’s Multinational Anti-Avoidance Law (MAAL) and the Diverted Profits Tax (DPT), informally dubbed the “Google tax”.
Both laws aim to collect more tax by imposing restrictions on multinationals’ ability to shift profits to lower-tax jurisdictions, and hefty penalties if they do.
But Mr Saint-Amans had previously noted that with companies such as Apple – which had been ordered to pay up to €13 billion ($19 billion) in back taxes, plus interest, to Ireland after the European Commission found the software giant had received “illegal state aid” – the bulk of revenue belonged to the US.
Mr Saint-Amans said the OECD/G20 plan to fight tax evasion, known as Base Erosion and Profit Sifting (BEPS), was about making sure tax bases were not eroded.
Now that governments could share in the revenue pie, the next question was who got the share. But he noted that BEPS was about eliminating non-taxation, not about solving the secondary problem of who had a right to tax.
Should Australia go beyond its right to tax, then the US had the right to claim its own tax, he said. However, for now “the US isn’t exercising its right to tax” and was unlikely to until US President Donald Trump’s reform agenda was implemented.
Tax experts have warned there can be heightened US-Australia tax disputes if the plan passes US Congress.
Deal to be signed in Paris
Mr Saint-Amans said the OECD/G20 plan was on track. He was pleased it had got agreement on a multilateral instrument, which would be formally signed in Paris on Tuesday evening, to stop companies exploiting gaps and mismatches in tax rules.
He was also thrilled Thailand was now the 98th country that had pledged to implement the BEPS plan’s minimum standards.
Mr Saint-Amans also said the OECD was working on closing down harmful tax practices and that a few regimes in low-tax nations such as Hong Kong and Singapore were being monitored.
He believed the OECD/G20 efforts to stamp out “non-taxation” was likely to be followed by many countries reducing their rates of company tax.
This would be the case, he said, regardless of the hurdles the Turnbull government faced in getting its corporate tax cuts for big business through the Senate.