The Greens party has issued a discussion paper calling for companies that engage in international tax minimisation to be named and shamed and whistleblowers to get a cut of revenues collected through Australian Tax Office fraud cases.
The Greens policy on tax avoidance comes a day after the party’s small business spokesperson Peter Whish-Wilson released a small business policy, and follows a proposal from Federal Treasurer Joe Hockey to introduce a “Google Tax” on profit-shifting by multinational companies.
At a recent hearing of the Senate inquiry on corporate tax avoidance Google, Apple and Microsoft denied dodging tax in Australia, but have confirmed the ATO is auditing their tax arrangements for alleged tax avoidance.
The key proposal in the Greens’ Stopping Corporate Tax Avoidance discussion paper is the mandatory reporting of the ultimate beneficial owners of companies, with the worst offenders to be named and shamed by the ATO.
Companies would also be forced to increase the amount of related party information they disclose in consolidated annual reports, including the revenues, profits, staffing levels and taxes paid in each country in which they operate or have subsidiaries.
The policy also calls for the reversal of 4400 jobs cut from the ATO over the past 18 months, increased information sharing between the ATO and the Australian Securities and Investments Commission, and proprietary limited companies would have to confirm to ASIC that they remain a small company.
The other key proposal is the creation of a US-style false claims act, which would mean whistleblowers could get a cut of the collected revenue if the ATO succeeds in prosecutions of tax fraud on the basis of the disclosure.
Greens leader Senator Christine Milne said in a statement both the public and Parliament have a right to know which companies are dodging their taxes
“Joe Hockey is all talk about international cooperation sometime in the future, but the Australian community can’t afford to wait. Another Hockey budget is only three weeks away,” Senator Milne said.
“The Abbott government needs to stop going after the sick, the elderly, students and the unemployed, and start taking on these hugely profitable companies that are organising themselves to rip off Australia.”
Peter Strong, executive director of the Council of Small Business of Australia, told SmartCompany naming and shaming could be part of the solution, but a bigger part is big businesses needing to confront other big businesses that minimise their tax.
“Instead of big businesses confronting other businesses that avoid taxes, you instead have a lot of big businesses respond by trying to minimise their own taxes,” Strong says.
“The problem is the integrity of the tax system. So big businesses and their advocacy groups need to come out and say you need to pay tax where you earn your profits.”
“Now some of these tech giants say ‘well we have our IT here, and our development here, and our administration here.’ That’s just smoke and mirrors – you know where you earn your profits.”
“You have to be contributing members of the community where you do business – and that means paying tax there. You can’t go from community to community saying you’re not part of the community.”
Mark Chapman, director of Chapman Tax Consulting, told SmartCompany there is no harm in attempting the Greens’ policy, as long as the presumption of innocence remains during investigations.
“Naming companies that are still under investigation for tax avoidance is the wrong approach – companies have the right to privacy. But if they’re found guilty of an offence then there’s no reason why you shouldn’t name and shame them,” Chapman says.
“The ATO clearly needs more resources. In fact, the depletion of resources from the ATO over the past 18 months while this corporate tax avoidance issue has been in the background has been nothing short of scandalous.”
“So the policy could be effective, with careful thoughts about how it’s implemented.”
Andrew Sadauskas is a former journalist at SmartCompany and a former editor of TechCompany.
