Treasurer to launch fresh attack on multinational tax avoidance as Parliament resumes
Treasurer Scott Morrison will launch a fresh attack on tax avoidance this week in Parliament in a bid to get the so-called “Google Tax” pushed through and shift public attention towards the Coalition’s record on multinational tax crackdowns.
The Diverted Profits Tax is due to be debated this week, almost a year after it was first introduced in the 2016 budget and less than two months before Mr Morrison hands down his second in May.
Mr Morrison told Fairfax Media the Diverted Profits Tax would close major loopholes in the system.
The tax targets companies with global turnover of $1 billion or more. Some $202 billion in revenue flowing between companies will come under the microscope, according to the Australian Tax Office.
“Legislation introducing these changes will also increase a hundredfold penalties for multinationals who fail to lodge tax documents and will introduce a new 40 per cent tax penalty for multinationals who break the rules,” Mr Morrison said.
Mr Morison said the tax would reinforce Australia’s position as having some of the toughest laws in the world to combat multinational tax avoidance and help build a “sustainable tax system”.
The measures extend further than those advocated by the OECD’s global profit shifting action plan which has urged nations to work together on combating multinational tax avoidance.
“It will help ensure our tax system can continue to fund public services like schools, hospitals, defence and welfare spending,” he said.
The tax is expected to raise $100 million in revenue per year from 2018 and will be coupled with the Multinational Anti-Avoidance Law which will target profits earned in Australia.
The Diverted Profits Tax has been met with resistance from the Corporate Tax Association, which claims the tax will have “unpredictable outcomes” with its limited appeal rights and will be detrimental to all companies operating in Australia.
Australian Tax Office commissioner Chris Jordan told the Tax Institute’s conference in Adelaide last week there had been “unprecedented levels of interest” in the tax behaviour of large corporates, especially multinationals.
He signalled a wider crackdown would occur this year after at least seven major multinational audits wrap up before June 30, with liabilities expected to total in excess of $2 billion.
“We are demonstrating our preparedness to take on taxpayers and their advisers who are not transparent, unco-operative or who engage in aggressive game-playing and egregious behaviour,” he said.
“This message is precisely what the majority of the community needs to hear.”
The popularity of the multinational tax crackdown among voters is in marked contrast to that of the company tax cuts, a $48 billion plan to slash the 30 per cent corporate tax rate to 25 per cent over 10 years. The cuts were introduced by the Turnbull government in February.
A ReachTEL poll of Prime Minister Malcolm Turnbull’s own electorate in February showed more than half of voters think companies could and should pay more, with similar results echoed across other blue-ribbon Liberal seats.
