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REFILE-Australia announces multinational tax avoidance in federal budget

Published 04/05/2016, 11:38 am
© Reuters.  REFILE-Australia announces multinational tax avoidance in federal budget
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By Jane Wardell

CANBERRA, May 3 (Reuters) - Australia announced a further crackdown on multinational tax avoidance in its annual budget on Tuesday, including the planned introduction of a UK-style diverted profits tax (DPT), that it expects to raise A$3.9 billion over the next four years.

The government is creating a new Tax Avoidance Taskforce of 1,000 specialist officers to police the new regime with harsher penalties for those found flouting the rules.

"Everyone has to pay their fair share of tax, especially large corporates and multinationals, on what they earn here in Australia," Morrison told parliament in his budget speech.

The new rules build on the country's Multinational Anti-Avoidance Law that came into force early this year. Australia in December took the unprecedented step of publishing the records of hundreds of companies, including Google Inc GOOGL.O and Apple Inc (NASDAQ:AAPL) APPL.O , which showed they paid little or no tax on their in-country earnings.

Of more than 1,500 largely foreign-owned companies which reported total earnings over A$100 million ($72.11 million) in the 2014 financial year, more than a third paid no tax, the Australian Taxation Office (ATO) data showed.

The proposed DPT or so-called "Google tax" will tax multinationals on income they have sought to shift offshore at a penalty rate of 40 percent - well above the current 30 percent company tax rate.

The new regime will also strengthen provisions for whistleblowers who report tax avoidance and increase penalties for multinationals that fail to meet their compliance and disclosure obligations to the ATO.

Morrison said the new measures would target private companies, high wealth individuals, trusts and tax scheme promoters as well as multinational companies, raising an additional A$3.9 billion in revenue over the next four years.

"Tax cheats will be tracked down and face the full force of the law," he said.

The government opened the proposed tax to industry consultation, with a June 17 deadline for submissions.

Google has already prepared some ballast to meet the changing tax winds, revealing in filings lodged with the Australian Securities and Investments Commission just days before the budget that it was restructuring.

The accounts showed the U.S. company paid A$16 million in taxes last year, still a fraction of its overall profit, as revenue from local advertising on its search engine business, estimated at more than A$2.5 billion, was booked offshore in the low tax nation of Singapore.

However, Google added it would this year "recognise revenue from the marketing and settling of certain services and products to Australian-based customers."

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