Business

Demand grows for inquiry on corporate tax avoidance

Georgia Wilkins
523 words
8 September 2014
The Age
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English
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Taxation

The government is facing calls for a parliamentary inquiry into the tax avoidance strategies of multinational
corporations.

It comes after Treasurer Joe Hockey pledged to crack down on complicated corporate tax schemes used by
multinationals, in a speech before the G20 finance ministers' meeting in Cairns this month.

Labor's assistant Treasury spokesman, Andrew Leigh, said an inquiry would help expose how global
companies, particularly those in technology such as Google and Apple, are shifting profits out of Australia to
minimise tax.

"While major corporations often make submissions to different government and parliamentary inquiries, it
would be beneficial to have the opportunity to question them directly about their activities," he said.

"An inquiry would also provide an opportunity for those firms to provide information and insight on how
Australia's tax laws impact on the conduct of their businesses."

A parliamentary inquiry in the Senate or the House of Representatives would need to be referred by a
government minister or gain the support of a majority vote.

A spokeswoman for Finance Minister Mathias Cormann declined to comment on whether the government
would support the move.

Dr Leigh said an inquiry could be run by the House of Representatives standing committee on tax and
revenue or the House economics committee.

"The decision about whether to support the establishment of a parliamentary inquiry would be a good test of
the Coalition's real commitment to addressing multinational profit shifting, given its mixed record on this issue
to date," he said.

Antony Ting, a senior lecturer at the University of Sydney Business School, said an inquiry would be timely
given the growing concern about corporate tax avoidance in Australia.

"It's a good time to really think about whether we should have a body that can grill those multinationals to try
to find more information," he said.

Mr Ting said similar inquiries overseas, such as the US permanent subcommittee on investigations and
Britain's public accounts committee, had exposed how much companies such as Apple, Starbucks, Google
and Amazon paid in tax.

Any inquiry would need to have similar powers to the US committee, which forced Apple to disclose detailed
global financial statements, he said.

"If we had that committee, we could find out, for example, exactly what transactions Apple Australia has had
with other related parties and all of its financial statements," he said.
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"The ATO would have much more information to work with."

Corporate Tax Association assistant director Michelle de Niese said there was already sufficient scrutiny of
corporate tax avoidance in Australia.

"Given the statement from the Treasurer yesterday around the robustness of the existing system and the
ATO's current and ongoing work around this issue, we don't think an inquiry would be necessary at all," she
said.

But Mark Zirnsak, a representative of the Tax Justice Network, said it could offer a chance for companies to
finally declare their connections to parent entities overseas.

"Getting the truth out there one way or another would be of great benefit to the general public," he said.

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