ATO Targets CE Companies Big Brands Set To Be Hit By New Tax Legislation
The Turnbull government expects to raise “hundreds of millions of dollars” from over 1000 multinational companies who are shifting vast amounts of revenue to tax havens.
1000 companies with global revenues above $1 billion are set to be targeted. They include Companies such as Sony who has already been fined over $30M for engaging in tax avoidance schemes, Samsung, LG, Panasonic and Companies like Epson who several years ago were investigated for transfer pricing.
Both Apple and Microsoft Australian operations are known to place orders on an overseas supplier or subsidiary and as these products are being shipped the ownership of the products change to a subsidiary based in a tax haven. Microsoft does this on the Surface Pro 3, Xbox console and Apple on their new iPhones, and iPads as well as their Mac PC’s.
Earlier today Treasurer, Joe Hockey made good on a budget promise, by introducing to Parliament a bill altering existing tax laws to target companies suspected of avoiding their fair share of tax.
Companies found to be “cheating” the Australian Tax Office will be forced to pay back double what they owe plus interest.
According to Fairfax Media Mr Hockey was immediately criticised by the opposition for not being able to put a specific figure on how much the measure will raise and tax experts warned that it could spark “retaliatory” laws by other governments to targeting Australian companies.
The Tax Office embedded staff in the offices of 30 high-risk multinationals to learn more about their tax structures, several of these Companies were technology Companies operating in the Consumer Electronics market.
Hockey said that a number of multinationals have already come forward and are, he said, “Prepared to restructure their businesses to pay their fair share of tax”. ChannelNews has been told that Apple and Google are among those Companies.
“With the introduction of this legislation, we are sending a clear message that Australia has no tolerance for tax avoiders. If you are avoiding tax, the Australian Taxation Office will catch you,” Mr Hockey said.
Tax Commissioner Chris Jordan said the ATO’s task would be to understand the actual profits companies make in Australia but “backed out” of the country.
A Senate inquiry into tax avoidance has heard evidence that multinational tech companies such as Apple, Google and Microsoft make huge sales in Australia but report tiny taxable profit margins.
Likewise, pharmaceutical companies are under pressure over their low profitability in high tax markets such as Australia.
The new rules appear to also apply to large Australian-owned multinationals such as BHP Billiton and Rio Tinto, which have been criticised for booking profits in low-tax jurisdictions such as Singapore where they have established “marketing hubs”.
Mr Jordan said: “We have to . have a much better understanding of [companies’] true cost of sales not some inflated cost of sales.
“We know there are billions of dollars of sales of revenue that is not being booked in Australia,” he said.