Australia toughens its stance on tax havens
A blitz on the use of tax havens is to be launched by the Australian government.
Joe Hockey, the Liberal party treasurer in the ruling coalition government, pledged to bring new legislation to go after companies that use offshore jurisdictions to cut their tax bills.
Mr Hockey, the equivalent of a finance minister, told Australia’s ABC radio that around 30 companies who are not paying their fair share of tax would be targeted.
The move comes as an Australian senate committee prepares to release a report which is expected to ask the Australian government to name and shame companies that avoid tax.
During a series of hearings by the committee, Bermuda was one of the countries mentioned as a jurisdiction used by companies doing business in Australia.
Top executives from global firms like Google, Apple and Microsoft all appeared before the committee.
Google came under fire last year for funnelling billions to Bermuda after the firm revealed nearly $12 million had been sent to the Island to avoid paying tax on its profits.
The firm, based in the US, used differences between the US and Irish tax codes, which means it is seen as an Irish company by the US tax authorities, but as a Bermudian firm by the Irish taxman.
Google’s tax arrangements — although legal — have been condemned in the UK and other European companies and prompted an international look at a crack down on corporate profit shifting.
Senate committee chairman Sam Dastyari, a member of the opposition Australian Labor Party, said: “These companies do care about their reputations and they do care about their market share.
“Exposing some of the worst practices, I believe, puts a lot more community pressure on these companies.”
And he added: “Whatever the government comes up with, the Senate will be in a much better position to consider that legislation given the forensic look we’ve had at this whole issue.”
Under current law, privacy provisions means that companies do not have to disclose specifics of their tax arrangements.
Senator Dastyari said: “It’s time we named them and we shamed them, and it’s time that we actually gave the Australian public an opportunity to know who these companies are, to know the practices they are engaged in, to not allow them to hide behind what currently exists as privacy provisions.”
The Australian government in May announced it would become the third country in the world to enter into new transfer pricing documentation standards to crack down on multinational tax avoidance.
The Australian senate committee is also expected to recommend that all companies should disclose every year how much money they made in Australia, how much tax they paid, tax deductions and other government write-offs.