PwC in secret tax deals while advising ATO
NEIL CHENOWETH
Global accounting firm PwC was advising the Australian Taxation Office how to run its transfer pricing unit at the same time that its Luxembourg office was cutting favourable tax agreements for Australian companies.
Luxembourg documents show PwC obtained secret tax agreements for more than 30 Australian companies in the European grand duchy from 2004 to 2010. A third of the deals were in 2008, the year that PwC Legal was advising the ATO how to assess Australian tax agreements, known as Advance Pricing Arrangements (APA).
The 2008 PwC Legal report remains a current issue, with the Inspector General of Taxation, Ali Noroozi, releasing a report in June which lashed the Tax Office for refusing to implement all of the PwC recommendations.
“There was no conflict of interest in providing advice to the ATO whilst also providing professional advice to clients,” a PwC spokeswoman said.
The Luxembourg tax agreements, which cover leading Australian companies including AMP, Macquarie and Lend Lease, are part of a massive leak of documents which The Australian Financial Review studied in a review led by the International Confederation of Investigative Journalists in the US.
Tax commissioner Chris Jordan has written to each country in the OECD’s 38-member Forum on Tax Administration about the documents.
“I have written to our tax treaty partners, inviting their collaboration in joint investigation of this data to understand any tax risks and to explore opportunities for joint compliance approaches,” he said.
In addition to Australian companies investing in Europe, the documents show how multinationals such as Vodaphone, Hutcheson and Procter & Gamble treat Australian income. The 11 2008 Australian agreements included three submitted on the same day.
In 2007 the ATO had become alarmed at burgeoning international tax avoidance, and commissioned an outside review of the elite ATO transfer pricing unit which handled Advance Pricing Arrangements.
The then head of the unit, Keith Johnson, told an Tax Office committee in November 2007 that PwC Legal (a separate legal entity to PwC) would make a report by March 2008.
