Australia Proposed New Tax Legislation
Australian Government proposed new legislation to tighten tax loopholes for the large multinational companies which always avoid paying taxes.
By the new legislation, Australia will look for the companies with more than A$1 billion in global revenues that are found to have intentionally avoided paying tax in Australia. “Under this new law, that cheating companies will have to pay back double what they owe, plus interest.” Said Joe Hockey, Australian Ministry of Finance in front of the Parliament to Reuters yesterday.
Hockey told that Australia have identified 30 large multinational companies that may have diverted profits away from Australia to avoid paying their fair share of tax in Australia.
With the new measures, Australia will join Britain in leading a crackdown on multinational companies such as Google Inc (GOOGL.O), Apple Inc (APPL.O), and Microsoft Corp (MSFT.O), focusing particularly on their alleged shifting of profits from high-tax countries to low or no tax regimes.
The Australian units of Google, Apple and Microsoft revealed earlier this year they were “under review” by the Australian Tax Office (ATO), which had declined to renew agreements with the companies on transfer pricing. That accounting practice, under which a company sets internal prices for goods to its subsidiaries, has been blamed for helping large companies minimize their tax bills by raising the cost of those goods to subsidiaries in high-tax regimes.
Under Australia’s leadership last year, the Group of 20 leading economies (G20) endorsed a set of common standards of sharing bank account information.
Apple’s revenues in Australia grew from around A$3.5 billion in 2010 to A$6.1 billion in 2013, while its taxable income went from A$166 million to A$240 million during the same period.
“I think if Australia really wants to protect its tax base, we really need to think about something like a Google Tax or this kind of unilateral action,” Said Anthony Ting, A professor in Sydney University.
Still, unilateral action is not without risks. “It’s unwise and ill-advised and irrational to depart from current approaches and agreements expressed in OECD rules,” Said George Barker, an expert on taxation law and economics at the Australian National University’s Centre for Law and Economics.