Thinking | 19 August 2015

Corporate Tax Avoidance – Interim Senate Committee Report – ‘Part 1: You cannot tax what you cannot see

Yesterday, the Senate Economics References Committee released an interim report on the Senate Inquiry into corporate tax avoidance and aggressive minimisation.

The Interim Report outlines a range of recommendations regarding:

  • efforts to combat tax avoidance and minimisation;
  • evidence of tax avoidance and minimisation;
  • areas where to take action to protect Australia’s revenue levels; and
  • the ability for government agencies to collect corporate taxes.

The main recommendations include:

  • Implementation of a mandatory tax reporting code as soon as possible. This would require Australian corporations and subsidiaries of multinational corporations, with annual turnover over a specific figure, to publicly report financial information;
  • Establishment of a public register of tax avoidance settlements reached with the ATO;
  • ATO and other agencies, should release an annual public report on tax avoidance and aggressive tax minimisation;
  • Companies tendering for government business required to reveal their country of domicile for tax purposes;
  • Mandatory notification by agencies to a Government Minister about contracts above a specified figure that are given to companies who are domiciled overseas for tax reasons;
  • ATO to be independently audited;
  • ATO to report annually to parliament on audits and tax disputes with multinational corporations;
  • Modification to taxation legislation to ensure non-reporting entities are required to disclose related party information in financial reports;
  • Modification to the ASIC Act to allow information sharing with the ATO without notifying the affected individual; and
  • Australian Government to work with Governments of other countries to increase the transparency of information about taxation and inter-related party dealings.

The Interim Report underscores a growing push for greater transparency into the affairs of large multinational taxpayers, and echoes recent developments in other advanced economies in targeting multinational tax avoidance.

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