Two months after he set up the Specialist Reference Group on Ways to Address Tax Minimisation of Multinational Enterprises, David Bradbury, the Assistant Treasurer, has announced that he has asked officials to look at ways of improving the transparency of the business tax system, including the disclosure of tax returns.
Bradbury also wants organisations such as the Australian Taxation Office, the Foreign Investment Review Board, the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority to look at how they could improve the sharing of tax information.
"Large multinational companies that use complex arrangements and contrived corporate structures to avoid paying their fair share of tax should not be able to hide behind a veil of secrecy," Bradbury said.
The minister said improved transparency would:
encourage enterprises to pay their fair share of tax and
discourage aggressive tax minimisation practices.
Transparency, he said, would also allow the public to
better understand the business tax system; and
engage in debates about tax policy.
“This work will enhance the administration and regulation of Australia's tax system and capital markets,” said Bradbury.
The Treasury, working with the specialist reference group, whose members include tax directors, tax professionals, trade unionists and academics, will look at three areas:
How the policy could best be designed to cover large and multinational businesses, including whether a threshold test would be appropriate;
Which federal taxes should be disclosed; and
How the tax information should be made publicly available.
However, the professional body for chartered accountants is not happy with the government's approach.
"The overwhelming majority of Australian resident taxpayers, including multinationals operating here, comply with their tax obligations," said Paul Stacey, the tax counsel of the Institute of Chartered Accountants Australia (ICAA). "Vilifying business for complying with the tax law is hardly conducive for economic growth.”
Law before election
Legislation could be required later this year to enact any recommendations, though this may not happen if Labor loses the general election which Julia Gillard, the prime minister, has called for September 14.
Bradbury has been critical of companies engaged in tax minimisation, particularly Google, which he mentioned by name in a speech to the ICAA’s national tax conference last November.
"The rest of the world should follow Australia’s lead, and implement country-by-country reporting," wrote EJ Fagan, in a blog for the Taskforce on Financial Integrity and Economic Development, which campaigns on transparency issues. "That means that companies like Google not only have to report how much tax they paid in every country in the world, but also data like their number of employees, revenue, costs, and other information in each country."
But Stacey only foresees problems with implementing tax disclosure measures.
“The proposal presupposes Australian resident taxpayers providing information on multinationals which either they don’t know or the disclosure of which would likely breach legal and commercial confidentiality obligations. Tax is just one component of a business’s contribution to Australia. Regard should be had to the wider picture including jobs created, goods and services supplied to consumers.”
