LABOR CALLS FOR TOUGHER MULTINATIONAL TAX PENALTIES
Labor has today introduced a Private Members Bill to toughen up penalties for companies that don’t comply with Australia’s new country-by-country tax reporting rules.
As of 1 January this year, companies doing business in Australia with global turnover over $1 billion must give the Australian Tax Office information about their economic activity and tax paid in every country where they operate.
These country-by-country reports will be a vital tool in helping the tax office identify profit shifting and tax minimisation strategies. They were a key recommendation of the OECD’s major Base Erosion and Profit Shifting Action Plan, released in 2015.
Yet under the Government’s current laws, the maximum penalty a firm would pay if it fails to lodge its report is $5,400. For a company with $1 billion in revenue, that represents 0.00054 per cent of their annual turnover.
This raises the risk that big multinationals will simply opt to pay the fine rather than lodge their country-by-country reports.
Under the Bill introduced to Parliament today by Shadow Assistant Treasurer Andrew Leigh, the maximum penalty increases by a factor of fifty, to $270,000. Furthermore, our bill empowers the Commissioner of Taxation to carry out a broad review of a company’s tax affairs if they still refuse to lodge their country-by-country report after reaching the maximum fine.
As Tax Commissioner Chris Jordan recently told the Senate: “Our Australian tax system is under fire from the actions of multinationals and large companies seeking to abuse it.”
New laws will not be enough to put a stop to this tax dodging unless they are backed up by serious penalties that pull companies into line.
Labor took the lead on updating Australia’s tax laws in government, and laid out a fully-costed $7.2 billion multinational tax plan during the first half of this parliamentary term. The tougher penalties in this Private Members Bill continue our work on tightening Australia’s tax net to ensure all big companies pay their fair share.
If Treasurer Scott Morrison is serious about making his new multinational tax laws work, then he needs to back this bill. Without tougher penalties, companies will simply laugh at our country-by-country reporting laws as they gladly hand over a miniscule fine.
Your move, Mr Morrison.
MONDAY, 29 FEBRUARY 2016