Leigh said that while the Tony Abbott-led government has "talked a big game" on BEPS action, it has "watered down" reforms implemented by the previous Labor government that sought to crack down on profit shifting.
"On December 14 2013, assistant treasurer Arthur Sinodinos announced that [the government] would abandon a $700 million ($640 million) measure to prevent multinational firms reducing their tax bill," said Leigh. "On January 4 2014, Senator Sinodinos said he was considering abandoning measures that required 200 of Australia's largest firms to disclose their total income, taxable income and tax paid."
Leigh described this week's G20 meeting as "a potential watershed moment in international tax policy" and added it is up to Joe Hockey and Arthur Sinodinos "to take up the baton left by Wayne Swan and David Bradbury so multinationals pay their fair share of tax".
Hockey has laid out what he described as an "ambitious and challenging" agenda for the meeting, saying "solutions must be global" - including input from developing countries - and not "unduly burden taxpayers".
"The strains are evident, and there is worldwide dissatisfaction with tax outcomes," said Hockey, adding that a starting point for the meeting will be a new standard to enhance transparency through automatic exchange of information.
Swan and Bradbury
Under the previous Labor government, Australia was keen to lead the way internationally on BEPS issues. David Bradbury, former assistant treasurer (and Global Tax 50 2013 member), was particularly focused on ensuring Australia took an international lead in this area.
He told International Tax Review in an exclusive interview in December that his proudest achievement as assistant treasurer was the role he played in tackling tax avoidance and elevating the BEPS debate onto the Australian policy agenda.
"Initiating a wide-ranging domestic debate around BEPS has led to the emergence of a bipartisan political consensus over the need to take action. Against the backdrop of Australia hosting the G20 next year, this has helped to position the Australian government to play an important leadership role in global efforts to address BEPS," said Bradbury.
Bradbury also said he feels the reputational aspect of the BEPS debate has helped to increase corporate engagement in the process.
"The reputational damage that the microscope of public scrutiny can inflict has clearly emerged as a key factor motivating more corporate leaders to participate in the BEPS debate. This is a welcome development," said Bradbury.
However, while some countries (including Canada and Germany) are contemplating unilateral action, Bradbury told International Tax Review that coordinated, multilateral action is the only route forward that will bring success.
"It will be crucial that efforts to address BEPS occur on a multilateral basis. While there has been considerable rhetorical support for this cause by many key global leaders, the proof of the pudding will be in the eating," he said.
Despite doubts from some countries over whether the OECD Action Plan will be able to meet its self-imposed deadlines, the OECD has been pressing ahead with its BEPS schedule - acknowledged by most as very ambitious in terms of the timeframes it set out - and earlier this month released a discussion draft regarding transfer pricing and country-by-country reporting.
"What I find interesting about the transfer pricing development is that on the one hand the OECD is reaffirming its commitment to the arm's-length standard and yet it has decided to embrace country-by-country reporting," said Remy Farag, senior international tax analyst at Thomson Reuters.
"The information required for country-by-country reporting would allow multiple jurisdictions to see how much income a taxpayer is reporting in another jurisdiction," added Farag. "Some jurisdictions could potentially use that information to make a transfer pricing adjustment based on factors that would be more consistent with a formulary apportionment approach."
