Never a good sign when they name a tax after you

20160130_LDD002_0

The Australian government says it will crack down on multinational corporations that try to shift their profits offshore to avoid tax.

It is being dubbed the ‘Google tax’, and is a key measure unveiled in last night’s Australian budget.

Treasurer Scott Morrison says companies caught shifting profits offshore will be taxed at a rate of 40 percent. That is higher than the standard rate of 30 percent.

The proposed Diverted Profits Tax (DPT) will apply to companies with global revenue of more than AU$1 billion and Australian revenue of more than AU$25 million.

The Australian Tax Office will get an extra 1,000 staff to target large companies and wealthy individuals who are trying to avoid tax.

It is hoped these measures will raise AU$3.9 billion in revenue over four years.

The Treasurer said in a statement those “seeking to do the wrong thing will be left with no doubt that deliberate tax avoidance and evasion will not be tolerated. Tax cheats will be tracked down and will face the full force of the law.”

I suspect that one day government may rue going after Google and its ilk.  But from the voters’ point of view, it’s an easy target to beat up on.  Faceless evil corporations make for great short-term whipping boys.

 

– Newshub

 


THANK YOU for being a subscriber. Because of you Whaleoil is going from strength to strength. It is a little known fact that Whaleoil subscribers are better in bed, good looking and highly intelligent. Sometimes all at once! Please Click Here Now to subscribe to an ad-free Whaleoil.

  • John Q Public

    Cue expensive and protracted lititgation, cash gathered for Uncle ATO, round about collection costs, at best.

    • localnews

      Yes, I wonder how big Google’s legal department is

  • Left Right Out

    It’s interesting the the Oz Govt is implementing this as if I’m to believe here say (always dangerous) this is what the Oz banks here in NZ do….. Is the Oz govt happy for their own to do it?? if true of course, like I say it is just here say to me

  • MaryLou

    For once I have to embrace my inner Left-ness, and whilst I think this is a dumb idea on its own, I appreciate the sentiment. A lot. Maybe better though, to couple a lower corporate tax rate with the high penalties for evasion, to shore up some of the difference between here and, say Ireland. But would be hard to level-peg it with Panama, clearly!

  • David Moore

    Get rid of corporate taxes and the whole issue disappears.

    • localnews

      Excellent idea! They could even try being business friendly to encourage more multinationals to come, employ people, pay GST and paye

  • shykiwibloke

    1000 new employees for the tax office! Ouch – there goes the expected gains in tax.

    • one for the road

      Right on, here is the maths…. (From the Undercurrent blog)

      Australia loses an estimated 5.36bn every two years in multinational tax evasion.

      Newly announced measures should/might/could/maybe/’let’s not lock anything in’ see $3.7bn recouped over four years.

      Redefining small business and reducing the corporate tax rate will reduce revenue by $4.65bn over four years.

      They lose an estimated $1.34bn per year in avoidance, gain $0.95bn per year in tougher measures and lose 1.16bn per year in tax cuts.

      Those figures wash up to show Aust is still worse off by $1.55bn by the announcement of this policy.

  • Annoyed

    Not trying to be harsh, but we already have transfer pricing and thin capitalisation rules, plus avoidance & penalty rules that cover what they’re talking about. The Media Party are pushing this but we already have it covered legally. The issue is what are regarded as fair transfer pricing and capitalisation. If the legislation doesn’t cover that it’s pointless.

    • one for the road

      Proving what is fair transfer pricing is not easy, they have been onto this for years and still havent got it under control – pretty easy for multinationals to price in such a way when selling to local subsidiary that most of the margins are wipd out locally…

      • Annoyed

        That’s my point – this legislation is most likely a joke that’ll achieve nothing. A lot of what they think should be taxable probably isn’t. It makes some sense that the revenue earned in Aus/NZ should be taxed in Aus/NZ, but the fact is that the assets, IP & management are all based offshore and by ignoring that you’re actually denying those offshore tax agencies their fair share of tax (even if it is nil – that’s a whole different issue). There is also a double tax issue where Imputation Credits/Franking Credits aren’t generally accepted under DTAs resulting in double tax when the income is transferred back to the parent company. That would also need to be looked at.

        The way I see it, they need to look at what a non-associated distributor would be charged (probably easy for Apple distribution, harder for Google & Facebook). Anything more than that should be disallowed.

  • one for the road

    “Allegedly 1000 specialist staff in the tax office will be working to ‘police and prosecute companies, multinationals and high net worth individuals not paying the tax they should’, according to ScoMo. Hey, you 4700 sacked workers from earlier! Look out for those 1000 new jobs on a seek.com page near you. Or, more likely, if you already work for the tax office, look out for a huge, additional burden to be added to your already critically underfunded and overworked office.”
    The Undercurrent

    Here is the full article…..

    http://theundercurrent.com/hard-in-public-soft-in-private-2016-budget-corporate-tax-announcements/

59%