BHP DECISION BASED ON LAWS THE COALITION VOTED AGAINST
The Coalition voted against laws that helped secure a $529 million transfer pricing settlement between the Australian Taxation Office and BHP.
These laws, passed by the former Labor Government in 2013, were opposed by Liberal and National Party members on the grounds that they were ‘retrospective’.
Scott Morrison and Josh Frydenberg owe the Australian people an apology. If they had their way, the budget would be millions of dollars worse off.
These laws were also used in the 2017 Chevron judgement, handed down by the High Court, which saw $340 million added to the budget bottom line.
Labor has supported all of the modest multinational tax measures that the Coalition has brought to the parliament. But the Liberals have refused to back our plans for closing loopholes, such as reducing debt-deductions by mega multinationals.
Under the Coalition, government debt is rising faster than it did during the Global Financial Crisis. Net government debt now exceeds $13,000 for every person in Australia. If the Coalition had gotten their way in 2013, another multinational tax loophole would remain open, and government debt would be higher still.
The Coalition should now adopt Labor’s full package to crack down on multinational tax avoidance and tax havens:
- Tighten debt-deduction loopholes used by multinational companies, improving the Budget by $3 billion over the medium term.
- Cap deductions for managing tax affairs at $3,000.
- Close a debt deduction loophole to ensure consistent treatment in related party financing arrangements.
- Automatically deny deductions from companies for travel to and from tax havens.
- Increase penalties for individuals and entities promoting tax evasion and avoidance.
- Crack down on citizenship shopping by requiring all individual Australian taxpayers to notify and declare to the Australian Taxation Office if they have residency or citizenship of any other jurisdiction and the name of that jurisdiction.
- Introduce public reporting of country-by-country reports, ensuring the release of high-level tax information about where and how much tax was paid by large corporations (over $1 billion in global revenue).
- Provide protection for whistleblowers who report on entities evading tax to the Australian Taxation Office and, where whistleblowers’ information results in more tax being paid, allow them to collect a share of the tax penalty (a reward of up to $250,000).
- Introduce a publicly accessible registry of the beneficial ownership of Australian listed companies and trusts, allowing the public to find out who really owns our firms.
- Introduce mandatory shareholder reporting of tax haven exposure, requiring companies to disclose to shareholders as a ‘Material Tax Risk’ if the company is doing business in a tax haven.
- Appoint a community sector representative to the Board of Taxation to ensure community sector voices are heard in tax design and review processes.
- Introduce public reporting of Australian Transaction Reports and Analysis Centre (AUSTRAC) data and require the annual public release of international cash flow data.
- Require all firms tendering for Australian Government contracts worth more than $200,000 to state their country of domicile for tax purposes.
- Develop guidelines for tax haven investment by superannuation funds.
- Require that the Australian Taxation Office’s annual report provide information on the number and size of tax settlements.
- Restore Labor’s $100 million threshold for public reporting of tax data for private companies, which was raised to $200 million by the Liberals and Greens in a move which exempted two-thirds of private firms from tax transparency
Authorised by Noah Carroll, ALP, Canberra.
1. The tax office media release announcing the BHP settlement referred to Practical Compliance Guideline PCG 2017/1, covering transfer pricing laws clarified and strengthened by the former Labor Government’s Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013 – specifically subdivisions 815-B, 815-C and 815-D of the Income Tax Assessment Act 1997.
2. The Coalition is fond of claiming that Labor voted against the Multinational Anti-Avoidance Law. This is a lie.