Australia to crack down on international tax loopholes from 2017Md Noman Siddique (Author) Published Date : Sep 20, 2014 17:25 IST
(Reuters) - Australia plans to introduce new rules in 2017 aimed at closing international taxation loopholes and stemming the loss of revenue from multinationals shifting their profits to low-tax countries, potentially reclaiming billions of dollars.
Taxation arrangements of global companies such as Google Inc (GOOG.O), Apple Inc (AAPL.O) and Amazon.com Inc (AMZN.O) have become a hot political topic following media and parliamentary investigations into how many companies reduce their tax bills.
The Organisation for Economic Cooperation and Development (OECD) has unveiled a series of measures that, if implemented by members, could stop companies from employing many commonly used practices to shift profits into low-tax centers.
We are absolutely determined to ensure that the companies and individuals pay tax in Australia on their earnings in Australia, Australian Treasurer Joe Hockey told a media conference at a meeting of Group of 20 leading economies in the Australian city of Cairns.
While Australia would be one of the first to implement the rules, Hockey said other countries needed to follow suit for them to be effective.
The whole world needs to go after tax cheats, Hockey said.
RESETTING THE RULES
Companies such as Amazon, Apple and Google say they pay all the taxes they should, and analysts say competitive pressures force them to seek to ways to minimize their tax bills.
OECD Secretary-General Angel Gurria said cross-border tax avoidance has eroded trust in the tax system by those most affected by the global financial crisis.
Since countries began targeting cross-border loopholes five years ago, an additional 37 billion euros ($47.5 billion) in tax had been recovered, he said, but estimated that firms were holding $2 trillion in low- or no-tax countries.
If you want to be too smart or navigate the system... then we will have a cacophony and that we need to avoid at all costs, Gurria said.
In its 2013/14 financial year (July/June) Australia recovered A$480 million ($428.5 million) in taxes as a result of information sharing with other jurisdictions, tax commissioner Chris Jordan told the media conference.
We are on the verge of resetting the tax rules for the next century, he said, adding that existing global tax standards were based on principals agreed on in the 1930s.
Australia to crack down on international tax loopholes from 2017