Australia: Big firms urged to pay fair tax share
23 September 2014
Posted by: Author: Andrew White
Author: Andrew White (The Australian)
Multinational companies are being urged to come clean on international tax avoidance ahead of measures being developed for the world’s largest economies to stop profits being shifted to low- and no-tax jurisdictions.
Organisation for Economic Co-operation and Development tax director Pascal Saint-Amans said the new rules would mean companies would no longer be able to get away with double non-taxation of international activities and other abuses, and had widespread support within the G20 group, which has made reform of international taxation one of its top priorities.
"We are delivering major changes and I can tell you it is time for companies to anticipate the implementation of the BEPS (base erosion and profit shifting) package,’’ Mr Saint-Amans said.
"We won’t have to wait for all countries to translate it into domestic legislation because if companies are smart — and they are smart — they know the new rules and they can revise their planning to be in accordance with the new rules.”
G20 finance ministers meeting in Cairns over the weekend agreed on new rules for information sharing that will see foreign investors opening bank accounts reported back automatically to their country of residence.
Voluntary disclosures by individuals in 20 OECD countries had netted €37 billion ($54bn) in additional tax ahead of the new information sharing agreements, Mr Saint Amans said.
Australia’s Tax Commissioner Chris Jordan said on the weekend that information sharing agreements allowed the ATO to reap an additional $480 million in tax revenue, whilst over 500 taxpayers have made voluntary disclosures of over $100 million in previously unreported offshore income.
The OECD has put forward a 15-point reform program over two years to combat moves by companies such as Apple, Google and Starbucks to pay little or no tax in countries such as Australia despite earning billions in revenue. "It means that under the new rules double non-taxation is no longer an option,’’ Mr Saint-Amans said.
"Companies will pay taxes where they sell goods, where they make profits, where they have activities, and the new set of rules are designed to make sure that all of the countries are equipped ... while ensuring that there is not double taxation.”
Mr Saint-Amens told a forum at accountants PwC in Sydney yesterday that the BEPS project was not anti-business or investment, but would help restore trust between business and governments.
Since the GFC many governments around the world had been forced to lift income and consumption tax rates to cover revenue lost to tax avoidance by companies.
Some companies were more supportive than others of efforts for reform the tax system, with US companies and technology companies among the most aggressive in their tax planning and opposed to the reform program.
PwC managing partner for tax and legal, Tom Seymour, said Australia could also grow the tax base by cutting the corporate tax rate from 30 per cent to 25 per cent in a bid to attract and retain more companies to operate in Australia.
Mr Seymour said a cut of that size would add 6.3 per cent or $590bn to Australian gross domestic product by 2050 — or around $16bn a year. "Tax competition between countries will always exist as nations will always fight to attract capital and jobs.
"Ensuring our tax system collects revenue in the most efficient way will make our nation more competitive and attract more business and trade to our shores,’’ Mr Seymour said.
The OECD previously found that there was a 2 per cent long-term gain in GDP from a 1 per cent revenue base shift away from company tax to indirect taxes.
This article first appeared on theaustralian.com.au