Joe Hockey's crackdown on corporate tax
avoiders might be a world first but it pre-empts what might have been a broader
agreement between G20 and OECD member nations.
Mr Hockey has declared war on thirty
multinationals who pay little or no tax in Australia while threatening fines of
100 percent of the tax owed plus interest.
But by going it alone has the Treasurer put
pre-Budget symbolism ahead unified action that stood to make a greater global
impact on tax dodgers?
Listen to my analysis from this morning's edition of AM on the ABC.
Listen to my analysis from this morning's edition of AM on the ABC.
Mr Hockey's tough talk ramped up last year
when Australia was on the world stage in its presidency of the G20 where
finding ways to target the likes Google, Apple, News Corp and Microsoft was
high on the agenda.
As with most things G20 related, the pressure
to turn worthy yet non-binding commitments into real action remains immense.
But throughout the G20 deliberations, the
myriad of laws and loopholes that vary across nations meant a global approach
seemed to be the only practical solution given the legal firepower of
multinationals.
The OECD, which is known to be months away
from finalising recommendations for a multi lateral approach, will almost
certainly be angered by Mr Hockey's action which is coloured by the pre-Budget
timing.
Michael Croker, head of tax at the Institute
of Chartered Accountants, says Mr Hockey might have been better waiting for a
more coordinated global approach.
"That's the key concern from tax
practitioners as the OECD is not far off finishing its work. It's expected to
wind up its final recommendations in November this year and present those to
the G20 ministers at their meetings in Turkey," Mr Croker told AM.
"So it's probably not going to go down
well from the OECD perspective, and it will perhaps raise some concerns that
maybe Mr Hockey lacks confidence in the outcomes from the OECD process."
Mr Croker thinks the pre-Budget timing is
potentially problematic for Mr Hockey who risks being accused of symbolism over
substance.
"I'm sure that will be levelled at the
Treasurer. But I think there's a sense that the public is of a mind something
should be done," Mr Croker said.
"Mr Hockey could say 'well I've acted
early and if the OECD comes out with better approaches, then I'll embrace the
OECD approach when I see their final recommendation."
The crackdown on multinational tax dodgers
means the Tax Office will have greater clout to do its job which in turn will
help coffers depleted by the falling iron ore price.
But Michael Croker says the government and
the ATO will need to act quickly to send clear messages to foreign companies
about the tougher penalties for tax avoidance.
"The ATO needs to be on the ball here
because these big companies are making big investments and expect very quick
turnaround," Mr Croker said.
"The ATO will effectively will carry the
load of determining what's a good inbound structure and what's a bad inbound
structure, in terms of these new anti-avoidance provisions. "
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