Trust Bloomberg BNA's Premier International Tax offering for the news and guidance to navigate the complex tax treaty networks and business regulations.
Sept. 9—Australian politicians are divided over whether they should continue a long-running Senate inquiry into corporate tax evasion that's put Google, Apple and Uber on the spot over controversial tax planning.
While the ruling Liberal-National Party Coalition's Jane Hume, deputy chair of a Senate finance panel that began the inquiry two years ago, believes there is “little appetite” for the inquiry, members of the opposition Labour Party are convinced more needs to be done to improve transparency around multinationals' tax practices.
The inquiry has so far issued two reports and put Apple Inc., Google Inc., Uber Inc., Pfizer Inc., Sanofi S.A., Chevron Corp. and Rio Tinto Group on the spot in an effort to gain insight on their efforts to minimize tax.
Its efforts have also resulted in extensive negative media coverage of the practices employed by large multinationals to minimise their taxes.
All parliamentary inquiries lapsed when Prime Minister Malcolm Turnbull called a federal election in May, and it is now up to the Senate Economics References Committee to decide whether to reconvene it.
Senator Hume told Bloomberg BNA Sept. 7 the inquiry had “substantial political undertones from beginning to end.”
She downplayed the inquiry's impact, saying many of the actions it recommended “were already being undertaken by the coalition” at the time the committee proposed them.
“Cracking down on corporate tax avoidance and ensuring everybody pays their fair share has been a priority for the coalition for a long time,” she said.
Whether the committee should reconvene the inquiry is a matter for its members to decide, she said.
However, the opposition Labor party—which has the majority on deciding committee—has a very different view on the impact of the inquiry.
It remains unconvinced that the ruling Coalition has done anywhere near enough to ensure that multinationals pay the right amount of tax.
According to Labor's shadow assistant treasurer Andrew Leigh, the inquiry has brought home to everyday Australians the harm done to them when big companies aggressively minimize tax.
The inquiry made it irrefutably clear that when large corporations and wealthy individuals exploit tax law loopholes, “all Australians suffer through higher taxes or poorer government infrastructure and services,” Leigh told Bloomberg BNA by e-mail.
In remarks that highlight likely key policy battlegrounds in coming months, Leigh accused the coalition government of not doing enough to improve transparency, and urged the establishment of a publicly accessible registry of the beneficial ownership of companies and trusts.
The government also hasn't done enough to close loopholes on matters such as excessive debt-loading, he said, which Leigh said should be controlled by subjecting companies to a worldwide gearing ratio.
Those who advise large corporates on tax matters say the inquiry was inevitable and in many respects desirable. Yet they worry that it has created a distorted impression of business practices.
“The Senate inquiry into corporate tax avoidance was an inquiry we had to have, and we welcome the public focus and the public debate on the tax system,” said David Watkins, Sydney-based partner and leader of Deloitte's tax insights and policy group.
“This is especially so at a time when economies globally are navigating disruptive changes to business models and the ‘once-in-a-100-year’ BEPS tax reforms are moving to the implementation stage,” he told Bloomberg BNA in e-mailed comments.
Watkins said tax discussions in Australia have moved at “light speed” since the inquiry began.
“We are talking about laws and proposals that didn't even exist two years ago,” such as the multinational anti-avoidance law, the diverted profits tax, significant global entities and Australian Tax Office engagement roadmaps.
“And we have seen the beginnings of a culture of tax transparency reporting,” Watkins said.
“From my perspective, an important part of the process so far is that the debate has brought out that Australia has, by any global measure, a robust tax system with strong integrity measures, administered by a capable tax authority,” he said.
“We also have a strong culture of voluntary compliance across the vast majority of business taxpayers,” he said. “I am, however, concerned that these strengths are being lost in the public perception of the tax system,” Watkins said.
“It is important that we maintain a balance in the policy framework that ensures that a strong tax system is also complemented by a tax and non-tax regulatory regime that encourages business to create, and retain, jobs in Australia.”
Meanwhile, one of the authors of the September 2014 Tax Justice Network report—in conjunction with the United Voice trade union which triggered the two-year-old inquiry—says it still has plenty it can do.
Mark Zirnsak , the public face of Tax Justice Network Australia, says the inquiry has demonstrated that poor taxpayer behavior is a concern “across a bunch of sectors” and “not confined to U.S.-based tech companies” which was the way the problem was previously being construed.
It has also transformed public thinking, Zirnsak told Bloomberg BNA by phone.
“All the polling we've seen, and the polling we've conducted ourselves, suggests that 80 to 90 percent of the population now think there is a problem with multinational corporations dodging the taxes they should be paying,” he said.
Zirnsak said the inquiry has provided useful momentum for tighter controls, pointing in particular to MAAL which took effect Dec. 2015.
Zirnsak added that it would also be useful for Rupert Murdoch-owned News Corporation to again front the inquiry, given recent revelations that the company was in dispute with the Australian Taxation Office, despite having “painted themselves as a model taxpayer” at a previous appearance.
Mining giant Glencore, which in 2015 announced it intended to close its Singapore marketing hub, would also be worth revisiting, according to Zirnsak.
To contact the reporter on this story: Murray Griffin in Melbourne at firstname.lastname@example.org
To contact the editor responsible for this story: Penny Sukhraj at email@example.com
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)