Most recently, members may have read some of the series of Fairfax press reports stemming from a publication that claimed almost a third of Australia’s largest companies are paying less than 10¢ in the dollar in corporate tax. Whilst there is ongoing commentary on the details and analysis contained within the report (Who Pays for our Common Wealth?), we can be certain that the focus on our tax system and the way that it interacts with the global tax environment is set to intensify.
Late last week the Leader of the Australian Greens, Senator Christine Milne, successfully moved that the Senate Economics References Committee examine tax avoidance and aggressive minimisation by both Australian corporates and multinationals operating in Australia. Specifically, the Committee will examine:
- the adequacy of Australia's current laws;
- any need for greater transparency to deter tax avoidance and provide assurance that all companies are complying fully with Australia's taxation laws;
- the broader economic impacts of this behaviour, beyond the direct effect of government revenue;
- the opportunities to collaborate internationally and/or act unilaterally to address the problem;
- the performance and capability of the Australian Taxation Office to investigate and launch litigation;
- the role and performance of the Australian Securities and Investments Commission in working with corporations and supporting the ATO to protect public revenue;
- any relevant recommendations or issues arising from the Government's White Paper process on the 'Reform of Australia's Tax System'; and
- any other related matters.
As I noted in a recent TaxVine, it is important to recognise that Base Erosion and Profit Shifting is not just a high-profile multinationals issue. The OECD’s work, once implemented in Australia’s domestic law and/or treaty networks, has the potential to impact on corporations with offshore operations on a smaller scale. Tax practitioners advising inbound and outbound clients of any size should keep abreast of these developments.
The Tax Institute will continue to be involved in these issues and I encourage members who would like to discuss this further to be in touch (firstname.lastname@example.org).