The ATO leads project to map mulinationals’ tax schemes

The Australian Tax Office (ATO) is leading a pilot project with five other countries to map the global tax planning of multinationals in the digital economy and share intelligence on their activities.

Profit shifting my multinationals, especially digital firms such as Google and Apple, has sparked widespread anger in Australia and around the world, strengthening political support for the OECD anti-avoidance project.

It is believed that the unprecedented co-operation allows us to better understand and determine what is being presented in our own countries compared to what is reported in other countries.

The ATO's work on digital multinationals has provided more accurate tax structuring examples to feed into the OECD's digital task force and other working parties. The work is expected to be adopted by other similar working parties and was endorsed by the OECD forum on tax administration – a grouping of international tax commissioners – meeting in October.

Australia has raised an additional $480 million in tax revenues from information sharing last fiscal year. This is expected to increase substantially when Australia implemented the OECD's Common Reporting Standard (CRS) for automatic sharing of tax information between countries in 2017. So far, forty countries have signed up to the CRS.

Treasurer Joe Hockey and OECD secretary general Angel Gurria deflected criticism from tax practitioners that the OECD was using 20th century international tax principles developed nearly 100 years ago under the League of Nations.

Mr Hockey stated that disruptive technologies have an impact not just on the existing traditional economy. They also have an impact on regulation and law-making. Hockey also explained that the government would engage the public in a discussion about the digital economy and digital payment systems in a tax white paper next year.

Mr Gurria said the digital economy was different but to so different that the "hard-core principles" modernised and evolved from 70 or 80 years ago to today couldn't apply. He said "Digital multinationals will not be exceptional, they will not be discriminated against, but the idea is they do pay their fair share like everyone else. That is a fundamental".

Author: Lily Lockwood

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