The Australian government will pursue some of the world’s biggest companies for tax avoidance through legislation expected to hit parliament within a month, Treasurer Joe Hockey said today.
Hockey told ABC radio he plans to go after 30 offshore-based companies to ensure they are paying their fair share of tax in Australia.
“In the next sitting fortnight I will introduce that bill, and that’s in partnership with the United Kingdom, but also we are taking a global lead in going after 30 primarily offshore-based companies that are not paying their fair share of tax,” he said.
“And finally we have more resources allocated in the Australian taxation office that has already delivered a dividend of $400 million extra tax revenue, going after multinationals and not paying their fair share.”
The Senate inquiry into multinational tax avoidance, led by Labor senator Sam Dastyari, will present an interim report today, which is expected to contain 18 recommendations including a proposal to “name and shame” companies not paying enough tax, although the idea remains short on detail when it comes to determining who has infringed.
Assistant treasurer Josh Frydenberg has already ruled out the idea.
“We’re not going to name and shame companies because we have better resourced the ATO, both financially and with new legislation, to go after these companies,” he said. “It doesn’t suit Australia’s purposes.
“The ATO is going after these companies, and we have more than 20 audits under way.”
Joe Hockey, who was not impressed details of the interim report had been leaked, said: “Senator Dastyari should be aware that in December, all companies that have a taxable income over $100 million have to disclose how much tax they pay in Australia.
“In the middle of my Budget speech, I actually tabled a draft bill to crack down on multinationals that are not paying their fair share of tax in Australia, and that is being rolled out.”
According to the AFR the Senate committee will write to sharing economy companies, including Uber and Airbnb, asking them to explain their taxation activities and potentially invite company representatives to appear at inquiry hearings.
Dastyari said Uber’s records suggested it did not pay income tax in Australia. Uber drivers are contractors, not employees but a recent ruling in California, which the company is appealing, deemed the drivers were employees and should be given benefits like social security, workers’ compensation, and unemployment insurance.
If the ruling is upheld, it would be a huge blow to Uber’s business model.
“Uber’s whole business model is built around having other people take the risks as independent contractors. And I don’t know if they can change that; it’s built into their business model. It’s how they’re making so much money,” Joseph De Wolf Sandoval, an organiser for the California App-Based Drivers Association (CADA) told Business Insider back in October.
In Australia the ATO ruled Uber drivers must start collecting GST from August 1. Uber launched a Federal Court appeal against the decision.
Dastyari says it’s important to set some ground rules in Australia which stop companies making profits in Australia sending the money offshore. He added that income tax had been difficult to collect from Uber because customer invoices were issued from an international company.
“If you don’t get the settings right now for these companies, we have the potential to lose tens of millions of dollars in the future,” he said.
“It defies belief that a company like Uber is engaged in some of the most aggressive tax minimisation practices, that it is an international company with a distribution area in the US and not an Australian taxi business.”
Last month the senate inquiry committee also contacted Santos, Chevron, ExxonMobil, Caltex, BP, Woodside, Origin and Viva Energy. It wants to know about the links between the companies’ Australian and foreign operations, specifically Singapore.
Chevron, ExxonMobil and Shell will reportedly book about $60 billion in tax-free profits over the life of the partners’ WA Gorgon gas project by charging their Australian subsidiaries an interest rate that is more than 10 times more then paid to US third-party lenders for loans, the AFR reports.
“Frankly they need to front and answer a lot of questions,” Dastyari said. “The inter-party loan arrangements don’t pass the sniff test and appear to be about minimising tax obligations. This is a worrying development.”
In April execs from Apple, Google, Microsoft, BHP, Rio Tinto and Glencore fronted the parliamentary inquiry into tax avoidance. Submissions revealed just how the vast bulk of Australian revenue goes offshore.
The inquiry is due to report on November 30.