Economy
Australia announces corporate tax crackdown
A crackdown on multinational corporations by Australian authorities has been described as “the first of its kind in the world”, with Google, Apple and Microsoft firmly in their sights.
Australian Treasurer Joe Hockey announced the plans on the eve of the Australian budget, saying that it was “pretty evident” which companies would be targeted.
The moves will see the Australian Tax Office given greater powers to recover taxes from large multinational corporations, which will include higher fines.
It was not specified exactly how much the government anticipated the measures to raise, but he insisted that it was “about the integrity of the Australian taxation system”.
“This is not a new tax in Australia. We don’t need to have a new tax in Australia”, Hockey said. “We need to strengthen our anti-avoidance measures”.
“If there is more integrity in the Australian taxation system, then Australians that do the right thing might just end up paying less. I mean, when someone does not pay their fair share of tax, it means that the mums and dads of Australia, the businesses of Australia, the consumers of Australia end up paying more and that is plainly unfair,” he said.
If passed by parliament, the measures will come into effect in the new year, and will give the tax office the power to impose taxes on diverted profits.
Hockey also announced the ‘Netflix tax’, which will force streaming service providers to implement a 10% goods and services tax (GST) on subscription charges.
Companies such as Google, Apple and Microsoft have been accused of avoiding paying tax in countries such as Australia and the UK by moving offshore to countries that have lower tax rates. Aggressive tax avoidance has been an issue that has hit the headlines in the UK on numerous occasions in recent years. In 2012, British MPs expressed their outrage at Starbucks, Amazon and Google, who were able to “exploit” both national and international tax schemes in order to pay as little corporation tax as possible.
Further Reading:
MPs deem global companies’ tax avoidance as ‘an insult to British businesses’
Budget 2014: Investment tax relief to boost social enterprises
Google, Amazon, etc: blame tax laws, not the taxman or taxpayer
New Fair Tax Mark highlights responsible businesses
Aggressive tax avoidance keeps on hitting the headlines