Senate passes bill to block tax avoidance by multinationals


news The Senate has passed new legislation aimed to ensure tax is paid by major international companies that operate in Australia but book profits offshore.

The government said it is committed to ensuring companies that earn income in Australia and benefit from the Australian economy pay their fair share of tax in the country.

Under the new legislation, which is called the Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill, companies caught cheating will have to pay back double the money they owe in tax, with interest.

“The government’s measures attack the heart of the multinational tax avoidance problem, whilst ensuring Australia remains an attractive and competitive place to do business”, the Treasurer Scott Morrison said in a statement.

The new bill will cover all multinationals operating in Australia with global revenues above $1 billion. The around 1,000 companies in this category will have to comply with the new rules if they have economic activities in Australia, but book their Australian sales revenue offshore. A number of major technology companies such as Google which currently funnel their Australian revenues through countries such as Singapore are expected to be affected by the legislation.

The laws also implement the OECD’s Country-by-Country reporting regime and new transfer pricing documentation standards, giving the Australian Tax Office (ATO) a better picture of how these multinationals companies internally operate, the statement said.

“This package of measures has been developed through an extensive feedback and consultation process undertaken by Treasury and as a result of having ATO officials working within key multinationals operating in Australia,” said Morrison. “The ATO now has additional detailed information of how many of these companies structure their tax affairs to avoid paying their fair share.

“Passage of this legislation sends a clear message that Australia has no tolerance for tax avoiders,” he said.

Morrison explained that the government consulted both with the ATO and Board of Taxation on the amendments, and later engaged with the Senate, including taking further advice on the amendments put forward by the Greens.

“While the government would have preferred the bill’s passage without the Greens’ amendments, we recognise that governing is about pragmatic choices and securing the best outcome available,” he said. “That’s why we have been prepared to work with the Greens in the Senate.”

Labor were similarly invited to the table but refused, according to the Treasurer.

Image credit: Matt Aiello, royalty free, Accenture


  1. Huh? What good does this do. They have to be caught cheating. The problem is what they are doing is legal.

    • Yup, pretty much useless. I’ve laid out why plenty of times, with the short story being that on an $800 iPad there ends up being about $150 in income being moved through Ireland. The other $650 is taxed somewhere.

      Its that move through Ireland that has everyone pissed off, but in the end its $50 tax on that item. At the end of the day, its moved legally as well.

      • “At the end of the day, its moved legally as well.”
        Except it hasn’t been since 2014 and may never have been. What’s been happening has been revenue departments of certain countries (including Australia) giving sweetheart deals of dubious legality (Tax Departments don’t necessarily have the legal powers to do so, it’s yet more dubious ‘legislation by internal policy’ that our current lot of big consultancy company sourced Public Service execs love to indulge themselves in) to cut tax for international companies (also big clients of the big consultancy companies by some lucky coincidence).
        That the system is corrupt has little to do with the politicians in thrall to an advisory system that has been set up to transfer public wealth to private hands. It’s the sad result of the corporatisation of the state.
        It’s not actually legal – just nobody is ever going to be held to the laws as they were intended.
        Once the TPP is in place even this fig-leaf will go.

        • Nice words. Doesnt seem to add up to much more than the standard conspiracy theory, but nice words anyway. What they do is perfectly legal as things stand. Go look up what transfer pricing is, its whole intent is to streamline these very costs for multinationals.

          The problem is that transfer pricing lets them divert the rights anywhere, so they’ve diverted them into the best situation they can. Why wouldnt they?

          Or is it OK for a business to make no profit and pay taxes twice? Or be forced to set up two, or three, or a hundred manufacturing deals and distribution processes? Its already hard enough doing business, that just sends even the biggest ones broke.

          Little tip. Woolworths paid about the same rate of tax as Apple Australia did on their turnover for 2014. So why is it that everyone thinks its OK for Woolworths to pay less than 2% of their turnover, but its not OK for Apple?

          • Probably because Woolworths’ margin is about 5%, whereas Apple’s is more like 50%…

            But, point taken – there’s plenty of (legal) tax dodging going on in corporate Australia. Multinationals are just easy to victimise because of being, you know, forrens…

          • Because Woolworths doesn’t pay 2/3rds of their apple (edible variety) income to a shelf company in Ireland because they own the IP on apples that the parent company sold to them for $1.

          • Of course to truly horrifying one are companies loaded up with debt that makes the rate on a GE credit card look good claim a loss on the interest they are paying to their off shore parent.

          • This is why I’ve stopped commenting online, I get dragged in too easily :)

            Break down an $800 iPad and there’s no massive markup people want there to be. People assume a lot of things because they want Apple to be the big bad company here, but in reality the numbers dont necessarily support that.

            Apple Australia had a turnover of $6b in the last FY I read about. How much tax do people think they should be paying? Nobody will ever give an answer to that, I can only assume its out of fear of looking stupid.

            There IS a problem, dont get me wrong, but Australia isnt going to solve it alone. Its so arrogant to expect that we can tell Ireland and the Netherlands how to structure their tax laws, and thats really what this comes out as.

            I have a solution, and its pretty simple. Sales within the company (ie, where transfer pricing is an issue) must be at cost. So the profit is taxed where its sold.

            The core part of all this is that of an $800 ipad, most is taxed somewhere – over 80%. Its the remains that are causing the problem. So change the rules so that amount gets forced into the final market.

            The profit margin isnt as much as people think here, its only about 20%.

          • “The profit margin isnt as much as people think here, its only about 20%.”

            Actually it’s a lot lower than that. If Apple purchased the IPads from China, that’d be fine, they would be fairly paying tax on the profit. But they don’t. They buy them off a shelf company in Ireland for around $750 of the $800 they sell for. That shelf company is owned by a company in a small country that gives Apple the best deal on tax and the $150 in profit made by the Irish company is taxed at about 10%.

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