Company tax secrets are safe unless they lie: tax commissioner
Companies appearing before a senate inquiry into tax avoidance are on notice that any false evidence they give will be corrected by the Tax Office.
Tax Commissioner Chris Jordan urged the committee to ask individual companies to disclose their own tax positions. He would correct the record if they provided information contrary to the ATO’s records.
Earlier, Mr Jordan came under pressure to release the details of tax avoiders but claimed public immunity to refuse the committee access to unredacted ATO documents. The documents would identify companies using marketing hubs in Singapore and Switzerland.
Mr Jordan said it would be detrimental to the tax system if he were to flout taxpayers’ expectation of confidentiality.
“I have suggested to you that you ask corporates specifically about their own information. And if comes to our attention that there is information that we don’t believe is correct or is misleading we are willing to inform the committee.
“Whilst we can’t give information about taxpayers, if they themselves make statements publicly that we know are incorrect we are within our rights … to correct the public record,” he said.
The ATO’s key enforcement initiative for multinationals is the International Structures and Profit Shifting program. It was set up to challenge assertions by companies who say they have no or little taxable presence in Australia but the ATO has cause to believe otherwise. By mid-way through this year, the ATO will have conducted 41 audits, including of 12 technology companies.
The commissioner told the inquiry the ATO had already collected $250 million as a result of the program.
“We committed to government to raise $1.1 billion in return for their investment of $240 million,” he said.
“We believe we will easily exceed that $1.1 billion. We’ve already raised $250 million of that, either through assessments or settlements.”
Major changes have been made to Australia’s transfer pricing and thin capitalisation laws in recent years.
But those updated laws had yet to be tested in the courts, the ATO said.
The tax commissioner told senators the anti-avoidance provision in the tax law, known as Part IVA, was a last-resort provision.
To pursue a company under the provision was incredibly complex and required the ATO exhausting other options first, including transfer pricing rules. A recent case involving Chevron involved 30 experts, 11 barristers and took years to get through the courts, Mr Jordan said.
Mr Jordan said marketing hubs were a key part of the problem. Over $100 billon of trade takes place between Australian companies and related companies in Singapore.
“The big issue that we have with a number of these companies are marketing hubs; some are in Singapore, some are in Switzerland.”
“We don’t believe in most of these cases the mark up is justified … so we are challenging them.”
The Australian Financial Review reported on Tuesday BHP Billiton and Rio Tinto save $750 million a year in tax by routing profits via Singapore marketing hubs.
“We are disputing marketing hubs of large companies, I can’t talk about individual companies. All I can say is marketing hubs are a huge concern for us, they are growing, it’s not just in the mining area, it’s being used in a much wider sense.”
