US agrees to give Australia additional intelligence to chase tax avoiders
America has formally agreed to share detailed information of companies with the Australian government’s Tax Avoidance Taskforce. This means authorities get access to additional intelligence to track down US-based multinationals.
This month, US authorities signed a country-by-country report exchange deal with Australia. It seeks to give authorities a broader picture of multifaceted structures that multinational utilise, which include their revenues, profits, international related party dealings and taxes paid by jurisdiction.
Australian authorities signed the country-by-country reporting plan last year. The measure, designed by the OECD, was described as a “game changer” as it seeks to help expose multinational tax avoiders.
Countries will begin sharing data from 2018. The reports are part of the OECD/G20 plan against tax avoidance called Base Erosion and Profit Shifting (BEPS). Only tax authorities will have access to the data, which will not be shared to the public.
A spokesperson for the ATO said the deal provides Australian tax authorities with further intelligence to better target its compliance activities. “It will help us to build a better picture of the international tax affairs of significant global entities and assess their transfer pricing risk,” the ATO spokesman told Fairfax Media.
Labor’s Andrew Leigh has welcomed the news, saying the country’s agreement with the US would boost tax transparency. He added it was “disappointing” that the Coalition wants to keep these reports secret.
The taskforce was announced in the 2016 federal budget. It started recruiting shortly after the Panama Papers revelations. The ATO employs experts whose job is to chase more revenue from multinationals.
The Tax Office has cut deals with huge companies in the previous years. ATO senior officials have said the agency now expects to recuperate most of the $4 billion of tax bills being issued to large companies.
“We continue to have real-time engagement with all large taxpayers, including access to a wide range of data, including tax return and accounting records, and third party data,” the ATO spokesman said, according to the Sydney Morning Herald. The spokesman added the taskforce increases the guidance and support available to these companies to ensure they do not break the tax laws.
Meanwhile, companies that feel that they have been unfairly taxed by two different countries can make an appeal to tax administrators. These include those headquartered overseas. Other counties such as New Zealand are also taking steps to hunt down multinationals that use artificial arrangements to avoid having a taxable presence.
