Multinational tax crackdown uncosted by Treasury
A new standard that would help stamp out tax evasion by forcing multinationals to give governments details about their tax affairs has been uncosted by Treasury, the latest budget update shows.
Under a plan agreed to at the G20 finance ministers meeting in Cairns held earlier this year and then confirmed at the summit in November, more than 90 jurisdictions will begin automatic exchange of tax information, using a common reporting standard by 2017 or 2018.
Australia will have its standard in place by 2017, which will involve banks and other financial institutions setting up systems that will allow them to automatically feed information to government agencies. But Australia’s first exchange of information would not take place until 2018.
According to the Mid-Year Economic and Fiscal Outlook (MYEFO), released on Monday after a slight delay caused by the siege in central Sydney, the common reporting standard is estimated to “deliver a small but unquantifiable revenue gain over the forward estimates period”.
“The standard will require banks and other financial institutions to collect and report to the Australian Taxation Office (ATO) financial account information on non‑residents,” the MYEFO papers confirmed.
“The ATO will exchange this information with the foreign tax authorities of the non‑residents. In parallel, the ATO will receive financial account information on Australian residents from other countries’ tax authorities. This will help ensure that Australian residents with financial accounts in other countries are complying with Australian tax law and act as a deterrent to tax evasion.”
At the G20 summit in Brisbane last month Prime Minister Tony Abbott declared the plan would “leave no place for tax cheats to hide”.
The MYEFO papers also showed the budget deficit for this financial year will be $40.4 billion, more than $10 billion larger than forecast in May.
KPMG tax partner Grant Wardell-Johnson said it was a relief that there were no announcements on a so-called “Google tax” like that introduced in the UK or other similar measures.
“Presumably consideration will be given to these potential measures at a later point in time, but the UK measures seem extremely complex, and it’s not at all clear who would be affected,” he said.
“It [a so-called Google tax] does not seem to fit comfortably with the OECD agenda – the whole point of which was for a multilateral approach to avoid countries taking unilateral action.”
Information collected by governments under the common reporting standard would remain confidential. Last month the OECD’s head of tax rejected calls to publicly release country-by-country breakdowns of taxes paid by multinationals, despite growing pressure from community and transparency groups.
